Why obscure express bus operator is suddenly market favorite
Seoul Express Bus Terminal in southern Seoul, Nov. 26 / Yonhap
Chunil Express shares extended their gains Friday after hitting the daily upper limit for nine consecutive sessions on expectations surrounding the redevelopment of the Seoul Express Bus Terminal.
The stock closed at 413,000 won ($281), Friday, up 9.69 percent from the previous day, while the KOSPI rose 1.78 percent to finish at 4,100.05.
From Nov. 19 through Dec. 3, the express bus operator hit the daily upper limit for nine straight sessions. The sharp rally prompted trading suspensions on Nov. 26 and again on Dec. 1 due to excessive volatility. Although the stock fell 5.64 percent on Thursday, ending its winning streak, it rebounded the following day.
The surge has been fueled by anticipation over the redevelopment of the Seoul Express Bus Terminal.
On Nov. 26, the Seoul Metropolitan Government announced it had begun formal preliminary negotiations with Shinsegae Central, Shinsegae Group’s real estate development subsidiary, and the terminal operator to advance a large-scale mixed-use development project for the 146,260-square-meter site.
Chunil Express is the terminal’s second-largest shareholder, holding a 16.67 percent stake after Shinsegae Central’s 70.49 percent. Investors appear to be betting that the company’s stake will increase in value once redevelopment moves forward.
Despite the stock’s steep rise, Chunil Express’ underlying performance has continued to worsen.
According to its regulatory filing, the company posted a cumulative operating loss of about 5.1 billion won from January to September this year.
Cash and cash equivalents stood at just 567 million won, while short-term borrowings totaled 14.75 billion won, resulting in an adjusted debt ratio of 372.13 percent. Its gross profit margin remains around 2 percent, underscoring the persistent structural weakness in its core transport operations.
The stock’s rally, meanwhile, has significantly boosted the personal wealth of CEO Park Do-hyun.
As of Sept. 30, Park owned 642,725 shares, or a 44.97 percent stake, in the company.
Based on Thursday’s intraday high of 518,000 won, his holdings were worth roughly 332.9 billion won. Compared with Wednesday’s upper-limit price of 399,000 won, which valued his stake at about 256.4 billion won, Park’s net worth increased by as much as 80 billion won in just a single day.