Summary

  • Hyosung Heavy shares plunged about 66%, falling from 4.742 million won to 1.612 million won.
  • Third-quarter operating profit was 243.5 billion won, far below the 306.5 billion won consensus estimate, weighing on the stock.
  • Brokerages cut their target price for the company from the 4 million-won range to the 3 million-won range, citing uncertainty over U.S. trade policy and a decline in peer valuations.

Forecast Trend Report by Period

Former 'emperor stock' faces twin blows from share slump and strike threat

Hyosung Heavy Industries Inc., once known as an "emperor stock" after trading near 5 million won a share, has plunged more than 60% from its peak. The decline, which goes beyond a halving and is closer to a two-thirds drop, exceeds losses seen in major semiconductor stocks such as SK Hynix Inc. The company is also facing a double hit from earnings that fell short of market expectations and the threat of a full-scale labor strike.

As of Nov. 6, the latest trading day, Hyosung Heavy shares closed at 1.612 million won, down 9.99% from the previous session, according to industry data on Nov. 8. That represents a drop of about 66% from the stock's one-year high of 4.742 million won.

The stock's weakness is being attributed first to results that failed to meet market expectations. Hyosung Heavy reported third-quarter consolidated operating profit of 243.5 billion won, up 10.8% from a year earlier, but well below the consensus forecast of 306.5 billion won. Logistics disruptions and higher costs weighed on earnings.

Brokerages have also sharply lowered their target prices for the company, cutting them from the 4 million-won range to the 3 million-won range. They cited rising uncertainty over U.S. trade policy and weaker valuations across the sector.

Labor-management tensions are compounding the pressure. Hyosung Heavy's office and technical workers' union warned it will launch a full strike for two weeks starting Nov. 17 if management fails to present an acceptable package proposal. The union had already carried out a 72-hour warning strike from Nov. 4 to Nov. 6.

The union is seeking a 10% increase in base pay, a framework for performance-based bonus payments and a reduction in welfare gaps among job categories. It says employees were not adequately rewarded despite the company's strong results last year, when consolidated operating profit rose 106% from a year earlier to 747 billion won.

Kim Bong-gu, Hankyung.com reporter, [email protected]

Korea Economic Daily