By Yoon Ja-young
Foreign investors are buying up AhnLab shares despite fluctuations on political issues and the market is wondering why.
According to Korea Exchange, the country’s stock market operator, foreigners bought a total of 15.8 billion won shares of the anti-virus software company between Feb. 9 and 20, recording net buying for eight consecutive trading days.
This resulted in the stake of foreign-owned shares in the firm increasing from 0.93 to 2.19 percent.
It contrasts with the response of small investors who dumped the stock as its price has been sliding since Feb. 3 when it peaked at 167,200 won. Its founder and the biggest shareholder Ahn Cheol-soo, dean of Seoul National University’s Graduate School of Convergence Science and Technology, has also been selling his shares.
As recorded in a filing at the Financial Supervisory Service, Ahn sold 444,517 shares, or 4.92 percent, from Feb. 13 to 17, for the social contribution foundation he is planning. He had announced that he would sell 860,000 shares and turn them into cash to create the funding. Another 1 million shares will be donated to the foundation as stock assets.
Foreign investors are sustaining the higher price by snapping up stock sold by Ahn and small investors.
“I am not sure why they are buying up the shares,” said Kang Lok-hee, an analyst at Daishin Investment & Securities. Analysts agree that AhnLab is still over-valued. The shares used to trade at around 20,000 won but started to soar last fall as Ahn rose to be one of the strongest potential presidential candidates. Though he has neither confirmed nor denied political ambitions, the price of Ahnlab shares has been fluctuating since then in response to political news. It has been falling recently upon the rise of Moon Jae-in, a senior adviser to the largest opposition Democratic United Party, as another potential candidate.
Kang said that he still believes the stock is over-valued. “From a fundamental perspective, I put its earnings per share at 2,226 won, which has increased greatly from around 830 won last year.”
He added “AhnLab is a good company and it has positive industry issues. For the next two years, it won’t need to worry about performance.” The introduction of the private information protection act, as well as the setting up of cloud computing, for which Internet safety is a prerequisite are to expand the demand for AhnLab products.
Even so, its price earnings ratio (PER) stands at around 45 and this is too high, according to Kang.
“Some investors may have determined that the prices have fallen a lot when considering the peak of 160,000 won. Even so, buying at such a high PER isn’t understandable. It may have fallen from the peak, but it is still about five times higher than the bottom price. Fundamentals should be the criterion, and the stock is expensive,” Kang said, who put the target price per share of the company at between 45,000 to 50,000 won.
Small investors here often bet on political issues instead of evaluating stocks on their fundamentals but making such risky investments is unusual for foreign investors. Kang says that AhnLab is different from other ‘current affairs’ stocks. “The company has recorded good performances and has also built up trust. It has good industry aspects that are turning into orders. Foreigners wouldn’t have bought the shares if they considered them as simply benefiting from the current political situation,” Kang said.
He said they may be buying the shares with a longer term view, expecting the fundamentals to become even better.