Hanwha Corp.’s preferred shares have more room to rise

Hanwha Corp.’s preferred stock has more room for growth as its price gap with the company’s common stock is the widest among peer companies affiliated with South Korea’s top 10 conglomerates, according to analysis by Maeil Business Newspaper on Thursday.

When measured by the price gap between common and preferred shares, Hanwha Corp. topped the list with 56 percent as of the closing price of Dec. 1. That means its preferred stock with the ticker symbol of 00088K is 56 percent cheaper compared to its common stock (000880). It is lower than peer preferred stocks of LG (43 percent), SK (42 percent) and Hyundai Motor (40 percent). Hanwha Corp. is the holding company of Hanwha Group, the country’s eighth largest business group.

A preferred stock is usually cheaper than a common stock because of limited voting rights, but the price gap of over 50 percent means the preferred stock is quite undervalued, an unnamed analyst said on Thursday. The usual price gap ranges between 10 and 20 percent, and Samsung Electronics is a case in point with 17 percent, the analyst added.

Hanwha Corp.’s preferred stocks also look attractive for its cash dividend for this year. The company has set 646 won ($0.59) for this year’s cash dividend for holders of the preferred stock. That is a 3.6 percent price-dividend yield, which is higher than that of Samsung Electronics (1.4 percent) and LG (2.7 percent). The abundant liquidity of more than 20 million outstanding shares also makes it easier for investors to trade them on the market, said market analysts.

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