While major large-cap stocks have been sluggish in the Korean stock market since the beginning of 2021, Hyosung Group stocks are having their heyday with their market capitalization expanding by a whopping 70 percent. Their prices jumped sharply as the chemical market entered a perfect upward cycle and Hyosung Group expanded its business to the environmental sector, especially the hydrogen economy.
The combined market capitalization of the top 30 business groups in Korea stood at 1,482.56 trillion won as of March 31, up 7.01 percent from the end of 2020, said Fn Guide on April 1. Of the 30 groups, 27 saw their market values increase from three months ago and only three suffered a setback.
Most of the business groups have grown in size but Hyosung Group's advance was especially noticeable. Hyosung Group's market capitalization, which stood at 5.19 trillion won at the end of 2020, jumped 73.1 percent to 8.99 trillion won in just three months. In addition, chemical and steel business groups such as Hanwha Group, POSCO Group, and Hyundai Motor Group, stood out. Chemical and steel businesses are usually sensitive to economic cycles. On the other hand, Samsung Group and LG Group are in a lull after a steep rise in stock prices of their affiliates from the end of 2020.
It was the three core subsidiaries that drove Hyosung Group’s market cap growth. The market value of Hyosung T&C, the largest among Hyosung affiliates, grew by 171.6 percent in just three months to 2,479.8 billion won at the end of March. Both Hyosung Advanced Materials (155.4 percent) and Hyosung Chemical (97.4 percent) enjoyed a sharp rise in their market caps. As the global economy has recovered, demand for major chemicals such as spandex (Hyosung T&C), polypropylene (Hyosung Chemical), and stiffeners for tires (Hyosung Advanced Materials) has been rapidly expanding, while their supply has been tight, which bodes well for the three chemical subsidiaries.
According to Fn Guide, Hyosung T&C's operating profit in the first quarter was estimated at 158.5 billion won, up 102.0 percent from a year before. Both Hyosung Advanced Materials (111.5 percent) and Hyosung Chemical (215.2 percent) are expected to record three-digit growth.
However, analysts note that their performances are not the only factors that drove the dramatic rise in market value. Hyosung Group is establishing a hydrogen value chain among its subsidiaries to break away from its old industrial portfolio focused on textiles, chemicals and heavy industries. It is seeking to secure new growth engines in eco-friendly businesses which are highly likely to grow. Hyosung Heavy Industries is expanding its liquefied hydrogen supply and hydrogen charging stations businesses and plans to open more than 120 hydrogen charging stations by 2022. Stock market analysts are giving favorable reviews of Hyosung Advanced Materials as the company preoccupies the carbon fiber market.
Market evaluations of companies with new growth engines and those without them were sharply divided. Hanwha Group (28.3 percent) and POSCO Group (25.7 percent) saw their market value rise significantly as they have subsidiaries engaged in high-growth areas, such as secondary batteries. Yet Lotte Group (10.6 percent) and CJ Group (6.9 percent) posted a relatively slower rise as their presence is less prominent in new business areas.
This article is reproduced at www.businesskorea.co.kr