Skip to content
  • KOSPI 3127.58 -12.93 -0.41%
  • KOSDAQ 1036.26 -9.86 -0.94%
  • KOSPI200 410.46 -0.53 -0.13%
  • USD/KRW 1177.6 8.50 0.72%
  • JPY100/KRW 1,072.64 7.06 0.66%
  • EUR/KRW 1,377.09 1.53 0.11%
  • CNH/KRW 182.5 0.60 0.33%
View Market Snapshot

Shareholding restructuring

Hyundai Gloivis, Mobis shares jump on ownership revamp hopes

By Oct 20, 2020 (Gmt+09:00)

Two Hyundai Motor Group arms – Hyundai Glovis Co. and Hyundai Mobis Co. – saw their shares rocket Oct. 20 on growing market talk of a possible revamp of their parent group’s web-like shareholding structure, which analysts said would benefit the two units.

After Chung Euisun officially took the helm of the world’s fifth-largest automaking group last week, market speculation mounted that the new chairman would revisit a plan to reform Hyundai's ownership structure to tighten his grip over the conglomerate.

Chung is highly likely to place both Glovis and Mobis at the center of the automotive group’s ownership revamp, analysts said.

Shares of Glovis, 23.3% owned by Chung, leapt by 14.33% to close at 199,500 won ($175) on Tuesday, marking its highest close in two and a half years. At one point, the transportation company shot up by as much as 27.22%, its biggest intraday gain since its parent group announced an ownership reform plan in 2018 that ultimately backfired due to shareholder opposition.

Its shares have been mostly on an upward trend over the past week, excluding a decline on Monday.

“Expectations about its ownership reform exploded,” said NH Investment & Securities analyst Kim Dong-yang, referring to Glovis' stock price on Tuesday.

Mobis climbed by 6.74% to close at the day's high of 237,500 won, amid market talk that a potential shareholding revamp could lead to the listing of part of Mobis’ operations.
Hyundai Motor Group Chairman Chung Euisun
Hyundai Motor Group Chairman Chung Euisun
Chairman Chung and his father Chung Mong-koo, the previous group chairman, have less than 10% stakes in most of the group companies.

In 2018 the junior Chung, then-Hyundai Motor Group executive vice chairman, sought to carve out Mobis’ module and after-sales parts divisions and combine them with Glovis. Under the proposed plan, Mobis’ remaining entity was meant to serve as the holding company of Hyundai Motor, Kia Motors and Glovis.

But he had to abandon the plan in the face of opposition from institutional investors, including US activist investor Elliot Management. They opposed the spin-off plan on concerns about shareholder value dilution.

At that time, Chung said he would supplement the ownership reform plan to boost business competitiveness, ownership structure and corporate value, reflecting various opinions.

Now that he has assumed the chairmanship, Chung is widely expected to revamp the ownership structure in a way that Glovis, the unit in which he has the highest stake, becomes the group’s key company, analysts say.

Since he began serving as the de facto leader in 2018, Glovis has diversified Hyundai's businesses into electric vehicle batteries, hydrogen fuel cells and used car sales.

SHIFT FROM BOTCHED 2018 REFORM PLAN


Unlike the proposed reform plan in 2018, Hyundai Motor Group may seek to list the module and after-sales parts divisions after carving them out from Mobis, and then merge them into Glovis, said Korea Investment & Securities analyst Kim Jin-woo.

“If Hyundai spins off Mobis’ after-sales parts business and lists it, before a merger into Glovis, the company could sidestep the controversy it dealt with two years ago,” he said.

Splitting up one company into two entities with the same shareholder structure and listing them could enhance existing shareholder value, Kim added.

POSSIBLE HYUNDAI ENGINEERING IPO

Other Hyundai Motor units, including software developer Hyundai Autoever Corp. and plant builder Hyundai Engineering Co. have also come into the spotlight. Autoever shares jumped by 8.74% on Tuesday. 

Chairman Chung controls 9.57% of Autoever and 11.7% of unlisted Hyundai Engineering.

As part of an ownership revamp, the conglomerate may list Hyundai Engineering to raise capital needed for the reform, according to analysts. The group family owners hold a combined 16.4% stake in Engineering, which is estimated to have a corporate value of 10 trillion won.

Meanwhile, Hyundai Motor and Kia Motors closed little changed at 167,500 won and 46,850 won, respectively, on Tuesday. Investors shrugged off Monday's announcement that a combined 3.36 trillion won would be booked as quality-related costs in their third-quarter results, given their upbeat business outlook.

Write to Jae-won Park at wonderful@hankyung.com

Yeonhee Kim edited this article.

Comment 0

0/300