LS Securities analyzed on the 12th that "corporate value enhancement is expected" regarding the open letter Truston Asset Management sent to KCC the previous day. It also raised its target price to 648,000 won from 526,000 won. KCC closed at 549,000 won in the previous session, leaving 18% upside.
Researcher Jeong Kyung-hee at LS Securities said, "Open letters have been sent in the past, but their practical impact was limited," while noting, "This shareholders meeting comes as measures to enhance ordinary shareholder value are being legislated, including the passage of an amendment to the Commercial Act centered on expanding directors' duty of loyalty, so increased impact is expected."
Earlier, Truston Asset Management sent an open shareholder letter to KCC centered on monetizing Samsung C&T shares and canceling treasury shares.
In particular, in the shareholder letter, regarding the long-held Samsung C&T equity (10.1%), it said, "The value of KCC's listed shares is about 5.4 trillion won, far exceeding KCC's market capitalization of 4.1 trillion won," and pointed out that "even though roughly 4.9 trillion won in Samsung C&T equity is a non-core asset that can be immediately monetized, maintaining high-interest borrowings while holding it harms shareholder value."
Truston Asset Management analyzed that if exchangeable bonds (EB) are issued backed by Samsung C&T shares, it would be possible to enhance shareholder value by about 54.6% by reducing interest expenses on high-interest borrowings. It further said that if Samsung C&T shares are sold to eliminate the discount, shareholder value could rise by as much as 78.3%.
Jeong assessed, "Monetizing the Samsung C&T equity holdings and canceling treasury shares are key factors for KCC's corporate value at present," and explained that the target price was raised by changing the discount rate to 30% depending on the possibility of moving away from long-term holding of Samsung C&T.