On the 6th, Poongsan Holdings shot straight to the upper limit (the top of the daily price cap range) at the start of trading on news that subsidiary Poongsan is pushing to sell its ammunition business institutional sector.
As of 9:31 a.m. that day on the Korea Exchange, Poongsan Holdings was trading at 47,250 won, up 10,900 won (29.99%) from the previous session. Poongsan was also trading at 111,600 won, up 14,800 won (15.29%).
The news that Poongsan plans to sell its ammunition business unit appears to have stoked investor sentiment.
Poongsan is a leading domestic defense company that produces key munitions used by the military, from small-caliber rounds to howitzer shells. The company operates the rolled nonferrous (copper) business and the defense business, and among these, the defense institutional sector accounts for about 30% of total sales.
According to the business community, Hanwha Aerospace, the flagship defense affiliate of Hanwha Group, recently submitted a bid proposal for the sale of Poongsan's ammunition business unit. The market expects the sale price for the ammunition business unit to be around 1.5 trillion won.
Succession issues are cited as the background for the sale. Chair Ryu Jin's eldest son is a U.S. citizen, and under the Defense Acquisition Program Act, only holders of Korean nationality can exercise management control over defense contractors.
Meanwhile, Poongsan Holdings is the holding company of POONGSAN Group and owns about 38% equity in Poongsan. It also has subsidiaries including Poongsan Special Metals (95%) and Poongsan Metal Service (100%).