Dongyang Express's Second-Largest Shareholder Sells Out, Stock Hits Limit Up the Next Day

Korea Wide Dongdaegu Cargo (hereinafter Dongdaegu Cargo), formerly the second-largest shareholder of KOSPI-listed Dongyang Express (084670.KS), recently disposed of its entire stake in the company. The sale resulted in a loss of more than 2 billion won for Dongdaegu Cargo. The company sold its Dongyang Express shares in the early stages of a rally driven by redevelopment news involving Seoul Express Bus Terminal—had it held onto the stake, it could have realized additional gains.

According to the Korea Exchange on January 10, Dongdaegu Cargo had held 227,181 shares (7.85%) of Dongyang Express since October 2020. The stake was acquired at an average price of 26,428 won per share, totaling approximately 6 billion won. After no changes in holdings, the company sold all shares on the open market over three days from December 26 to 28 at an average price of 17,268 won per share, recovering approximately 3.9 billion won. This represented a loss-cutting sale of approximately 2.08 billion won.

The stake was originally held by Vice Chairman Noh Heon-young of Gyeongbuk Express and related companies before being transferred to Dongdaegu Cargo in 2020 as part of a restructuring of shareholding entities. Vice Chairman Noh first appeared as the fifth-largest shareholder in 2012 when he and affiliated companies including Korea Wide Daehwa Transportation and Korea Wide Jinan Express acquired a 5.81% stake in Dongyang Express. The investment was for simple investment purposes, and the stake subsequently increased through stock dividends and bonus issues.

The current largest shareholder of Dongdaegu Cargo is Korea Wide Co., Ltd., which holds a 73.39% stake. Dongyang Express's stock price had steadily declined from the 26,000 won range in 2020 to 6,560 won in April this year. The company recorded losses for five consecutive years from 2020 through last year. Dongdaegu Cargo had thus been stuck with the Dongyang Express investment for more than five years.

However, on December 26, the Seoul Metropolitan Government announced it would begin preliminary negotiations for the mixed-use redevelopment of the Seoul Express Bus Terminal site in Seocho-gu. This brought attention to Dongyang Express as a beneficiary stock due to its 0.17% stake in Seoul Express Bus Terminal. The stock price quickly surged past 17,000 won. Dongdaegu Cargo appears to have moved swiftly to dispose of its holdings.

But Dongyang Express's stock price continued to soar, hitting the daily limit up for three consecutive trading days from January 2 to 5 (excluding January 4 when trading was halted), reaching 27,750 won. The stock was then designated as an investment risk issue, resulting in a one-day trading suspension. After trading resumed on January 9, the stock hit the limit up again, climbing to 36,050 won.

Had Dongdaegu Cargo sold at just the previous trading day's closing price, it could have realized gains of more than 300 million won. However, by hastily disposing of its stake in the early stages of the price rally, the company ultimately failed to realize a profit, market observers noted.