iM Securities analyzed on the 21st that a valuation reassessment benefit is expected due to the introduction of directors' loyalty obligations for shareholders at Hyosung. It adjusted the target price from the previous 60,000 won to 100,000 won and maintained an investment opinion of 'buy.' The closing price of Hyosung on the previous trading day was 77,900 won.
iM Securities noted that conflicts of interest between controlling shareholders and minority shareholders frequently occur in holding companies, leading to significant holding company discount rates. In other words, for holding companies, restructuring of ownership structures and concerns about potential future conflicts of interest among shareholders are reflected in the increasing discount rates under an environment of cross-listing subsidiaries.
Lee Sang-heon, a researcher at iM Securities, explained, "As concerns about potential conflicts of interest due to the introduction of directors' loyalty obligations are resolved, it will lead to a reduction in structural discount rates," adding, "Valuation reassessment is expected to benefit companies like ours, which are holding companies."
The current bill to amend the Commercial Act stipulates that not only the appointment and dismissal of committee members of the audit committee who are not outside directors but also in the case of the appointment and dismissal of audit committee members who are outside directors, the decision-making rights of major shareholders and related parties are limited to 3%.
The researcher indicated that the recent amendment to the Commercial Act has established a system that allows the audit committee to operate independently, free from the influence of major shareholders, thereby faithfully fulfilling the role of an independent audit body.
He said, "If the bill to expand the subject of separately elected audit committee members from the existing one to two or more passes, the influence of minority shareholders on the composition of the audit committee will increase, which could accelerate the effect of governance improvement at Hyosung."