News and Updates on HD Hyundai
HHI Group Shows Commitment to Shareholder-Friendly Actions
Hyundai Electric and its parent Hyundai Heavy Industries (HHI) Holdings respectively resolved a bonus issue and purchase of an additional 3% stake in the subsidiary at their respective Board of Directors’ meetings held on Friday.
Hyundai Electric said it will reward its existing shareholders with a 1:1 bonus issue, which means one free share will be issued for every share held, in an attempt to ensure higher stock liquidity and enhance the shareholder value. The new shares, to be allocated on November 26, will be listed on the Korea Exchange (KRX) on December 18 for trading.
The decision coincided with its parent HHI Holdings’ resolution to purchase an additional 3% stake in Hyundai Electric for KRW 12.4 billion. With a three-month purchase period from November 26 this year—when the new shares will be credited to shareholders of Hyundai Electric— to February 25 next year, the holding company’s stake in the subsidiary will go up to 37.7% after the transaction.
“Hyundai Electric’s bonus issue and HHI Holdings’ additional stock purchase decisions are all part of the shareholder-friendly policies that our group has consistently pursued ever since the reorganization into a holding company structure earlier this year,” said an official of the group to explain the idea behind these moves. Indeed, HHI Holdings announced in August a dividend policy to maintain its propensity to pay dividends at 70% or over (dividend yield at 5% or over), and HCE early this month repurchased its own outstanding shares and issued bonus shares to existing shareholders to help enhance the shareholder value.
“The decision to offer free additional shares to our shareholders came in response to the feedback from the market that our stock is not sufficiently liquid,” said an official of Hyundai Electric, adding “we will continue to pay attention to voices from the market to ensure our business is valued at an appropriate level.”
Hyundai Electric intends to make all-out efforts to enhance its corporate value with improved earnings when the market is showing signs of gradual recovery. The manufacturer expects to see an across-the-board improvement in the business profitability starting next year when its ongoing investments, including building a smart factory locally and expanding an Alabama-based production plant, will materialize.
HHI Holdings expressed confidence that its purchase of an additional stake in Hyundai Electric will help boost earnings of the subsidiary, a significantly undervalued business, while vowing to make endeavors to restore investors’ confidence and increase the shareholder value.
“Recent trends show Hyundai Electric’s shares are being traded at a mere 44% of their book value,” said a source at HHI Holdings. “The stock is absolutely undervalued compared to the intrinsic value and growth potential of the company.”