South Korea's Lotte Corp soars in debut on investor hopes for better returns www.reuters.com
SEOUL (Reuters) - Shares in Lotte Corp, the new holding company for South Korea’s No. 5 conglomerate, soared some 45 percent 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 on Monday were some 17 percent above levels for comparable entities in late September.
In early afternoon trade, Lotte Corp’s stock was trading at 68,400 won per share, above its issue price of 47,100 won.
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 percent 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 on Monday 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 percent as they switched out of the firm and into Lotte Corp.
Lotte Shopping, the group’s flagship retail unit, was down 6.6 percent. 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 percent drop in third-quarter operating profit.
The Lotte group agreed to hand over land to the South Korean government for a U.S.-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 controls 42 of the group’s 91 units, a spokeswoman said, and plans to add others like Lotte Chemical and Hotel Lotte in the longer term.
Published Date:2017-10-30