Lotte soars in de­but on in­vestor hopes for bet­ter re­turns

The Star Malaysia - StarBiz - - Foreign News -

SEOUL: Shares in Lotte Corp, the new hold­ing com­pany for South Korea’s No. 5 con­glom­er­ate, soared some 45% on their de­but above their is­sue price, bol­stered by hopes for bet­ter cor­po­rate gover­nance and share­holder re­turns.

Although the de­but comes at a dif­fi­cult time for the con­glom­er­ate, which has been hit by po­lit­i­cal ten­sions be­tween Bei­jing and Seoul, com­bined val­u­a­tions for the group’s main listed firms yes­ter­day were some 17% above lev­els for com­pa­ra­ble en­ti­ties in late Septem­ber.

In early af­ter­noon trade yes­ter­day, Lotte Corp’s stock was trad­ing at 68,400 won per share, above its is­sue price of 47,100 won.

South Korea’s stock ex­change, how­ever, cal­cu­lates moves on the first day of trade by com­par­ing with an open­ing price which it works out from an av­er­age of orders be­fore trade. On that ba­sis, it was up about 7% on the day.

The hold­ing com­pany was cre­ated to sim­plify the group’s com­plex own­er­ship struc­ture and en­hance the con­trol of chair­man Shin Dong-bin, who sur­vived a power strug­gle with his el­der brother.

Un­der the re­struc­tur­ing, four key group firms – Lotte Shop­ping, Lotte Con­fec­tionery, Lotte Chilsung Bev­er­age and Lotte Food were each split into two com­pa­nies, with half of the re­sult­ing eight firms com­bined into one hold­ing com­pany.

The re­main­ing four com­pa­nies re­sumed trad­ing yes­ter­day af­ter hav­ing been sus­pended since Sept 28.

Lotte Con­fec­tionery, which has pre­vi­ously served as a proxy for the whole Lotte group for many in­vestors, tum­bled 13.5% as they switched out of the firm and into Lotte Corp.

Lotte Shop­ping, the group’s flag­ship re­tail unit, was down 6.6%. One of the South Korean firms’ most hurt by the po­lit­i­cal ten­sions be­tween Bei­jing and Seoul, it has had to close most of its stores in China and last week posted a 58% drop in third-quar­ter oper­at­ing profit.

The Lotte group agreed to hand over land to the South Korean govern­ment for a US-made mis­sile de­fense sys­tem in late Fe­bru­ary – a plan that has an­gered Bei­jing, which ar­gues the radar can pen­e­trate far into its ter­ri­tory.

Lotte Corp cur­rently con­trolled 42 of the group’s 91 units, a spokes­woman said, and planned to add oth­ers like Lotte Chem­i­cal and Ho­tel Lotte in the longer term. — Reuters

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.