Kumho, Dongbu Shares Plunge Below Face Value
By Kim Tae-gyu
Staff Reporter
It's common sense that shares trade at higher prices than their face value and if they fail to do so, they are in trouble, more often than not.
Under the criteria, almost one out of five companies listed on the Seoul bourse are facing difficulty amid the unprecedented global financial crisis.
The Korea Exchange, the bourse operator, said Sunday that 17 percent, or 312 listed firms out of 1,797, had their share prices plummet under their par value as of last Friday.
``To be certain, the lingering financial distress would be the main culprit responsible for low share prices. But you cannot pass all the bucks to the financial crisis,'' a Seoul analyst said.
``It is a kind of wake-up call. Investors suspect whether companies whose shares are worth less than their face value will be able to remain afloat,'' he said.
In particular, affiliates of three mid-tier chaebol ― Kumho, Donbgu and Doosan ― appear to suffer most, with many of them remaining undervalued.
Kumho Group has half a dozen underachievers under its wing, including Asiana Airlines (3,250 won), Kumho Tires (3,360 won), Kumho Investment Bank (420 won) and preferred shares of Kumho Ind. (2,985 won) and Kumho Petrochemical (4,960 won).
Dongbu Group followed with four ― Dongbu Hiteck (3,430 won), Dongbu Corp. (2,760 won), Dongbu Securities (4,380 won) and preferred stocks of Dongbu Steel (2,420 won).
Doosan Construction & Engineering, which started last week with 5,310 won, lost substantially to end at 4,750 won last Friday, falling below its face value of 5,000 won.
Many financial companies were also in a quagmire, headed by Meritz Securities (825 won), KTB Securities (2,820 won) and preferred stocks of Hanwha Securities (2,815 won).
The face value of the above-mentioned companies' shares are 5,000 won, with the exception of Meritz Securities, with 1,000 won, and Kumho Investment Bank, with 500 won.
Chaebol refers to Korea's sprawling conglomerates in which founding families exercise almost unchecked control despite small direct shareholdings.
Samsung Group, which has such flagship units as Samsung Electronics or Samsung SDI, is the country's biggest chaebol. Kumho, Doosan and Dongbu are mid-string.