The history of Korea's "emperor stocks"—shares trading above 1 million won—began with SK Telecom (017670) in April 1999. Riding expectations for mobile communications growth, SK Telecom surpassed 1 million won per share and soared to as high as 5.07 million won intraday in February the following year. As criticism mounted that the trading price was excessively high, the company carried out a 10-to-1 stock split, lowering the par value from 5,000 won to 500 won. The stock, which had traded around 2.94 million won just before the split, dropped to 294,000 won and rose to 370,000 won two months later.
Amorepacific (090430) decided on a 10-to-1 stock split after its share price broke through 3 million won in February 2015, buoyed by expanding Chinese consumption and a rally in cosmetics stocks. The decision came as the high share price had limited average daily trading volume to around 10,000 shares. After retail buying, which had been blocked by the burden of the high price, flowed in following the split, the proportion of retail investor trading volume jumped from 27.2% to 60%.
Since then, Samsung Electronics (50-to-1 in May 2018), Naver (5-to-1 in October 2018), Kakao (5-to-1 in April 2021), and Ecopro (5-to-1 in April 2024) have also opted for stock splits. Notably, Samsung Electronics had fewer than 150,000 minority shareholders before its split but now has 4.19 million, becoming a "people's stock."
In this way, stock splits have repeatedly emerged whenever surging share prices raised the need to improve trading convenience. The stock matching this playbook this year is Hyosung Heavy Industries (298040). According to the Korea Exchange on Tuesday, Hyosung Heavy Industries' share price stood at 3.912 million won on the 30th of last month, rising to as high as 4.018 million won intraday, surpassing Amorepacific, which had previously held second place. It has the highest per-share price among the nine emperor stocks in the Korean market.
The pace of the share price gain is also steep. It took less than half a year for the stock to climb from 1.845 million won at the start of the year to 4 million won. In April alone, it surged 59.28%. The gains are attributed to increased demand for power equipment driven by artificial intelligence (AI) data centers. Indeed, Hyosung Heavy Industries' new orders in the first quarter reached 4.1745 trillion won, up 107.8% from a year earlier, marking a record high.
The earnings outlook is also bright. According to brokerage consensus, second-quarter consolidated revenue is estimated at 1.8172 trillion won and operating profit at 287.6 billion won, up 19.1% and 75.1% respectively from a year earlier. Following Yuanta Securities, Eugene Investment & Securities also recently raised its target price for Hyosung Heavy Industries to 5 million won. "The high market share of 765kV transformers built into the U.S. power grid and the capability to respond to 800kV circuit breakers, which can be ordered in connection with them, are competitive strengths," said Heo Jun-seo, an analyst at Eugene Investment & Securities. "There is a possibility of an upward revision to order guidance."
A stock split divides the par value of existing shares at a fixed ratio to increase the number of shares in circulation, without increasing capital. As the number of shares in circulation rises and the price per share falls, it has the effect of bringing in liquidity. Since there is no change in corporate value, it is generally difficult to view a stock split as leading to a share price increase. However, LS Electric, a company in the same industry that carried out a 5-to-1 stock split last month, saw its share price jump from 179,200 won when it was relisted on the 13th of last month to 278,000 won on the 30th of last month.
Experts believe Hyosung Heavy Industries has sufficient justification to consider a stock split to ease the burden of its high share price. Considering the share price approaching 4 million won and the declining proportion of retail trading, a split would have the effect of broadening access for small investors and strengthening upward share price momentum.
Hyosung Heavy Industries has so far drawn a line against a stock split. The company argues it is hard to conclude that its trading base has weakened enough to require immediate liquidity reinforcement. Still, the proportion of retail investors is on a declining trend. The proportion of retail trading volume, which was 44.39% in January, fell 15.01 percentage points to 29.38% in April. Over the same period, monthly trading volume also fell from 1,511,045 shares to 1,140,702 shares. "The current share price is at a reasonable level relative to earnings," said Jung Yong-taek, senior research fellow at IBK Investment & Securities. "Discussion of a stock split may arise, but the company's value and the need for a split are separate issues."
