Eighteen Korean companies disclosed asset revaluation results in the first half of the year. Eight stocks rose, nine declined, and one remained unchanged following the announcements. The reassessments came amid inflation and real estate price surges that have drawn investor attention to low price-to-book ratio (PBR) asset stocks holding physical properties like land and buildings. Hanwha Investment Securities' report '건물주(建物株)와 지주(地株): 자산 재평가 옥석 가리기' analyzed the market reactions, noting that while larger gaps between book value and market value can signal upside potential, stock prices may still fall due to negative side effects of revaluation.
Asset revaluation produces varied effects. Positive outcomes include stock price increases reflecting real asset value and reduced debt ratios. Negative outcomes include increased profit volatility, lower return on equity (ROE), and higher depreciation expenses due to increased tangible asset book values.
Daewon Hwaseong and Mercury Record Stock Gains After Land Revaluation
Daewon Hwaseong and Mercury were among eight companies whose stocks rose following asset revaluations. Daewon Hwaseong's land in Osan, Gyeonggi Province, had a book value of 36.3 billion won that increased to 91 billion won after revaluation. On the 18th of last month, the stock closed at 3,945 won, up 29.98% from the previous day.
Mercury disclosed revaluation results for land in Seo-gu, Incheon on January 6. The land's book value rose from 10 billion won to 68.5 billion won. The stock closed at 3,370 won that day, up 9.06% from the previous session.
Ten Companies See Muted Market Response to Asset Reassessments
Ten companies failed to generate significant market reactions. In some cases, markets already knew that land or buildings—major asset components—had market values higher than acquisition costs, and this information was reflected in stock prices. In other instances, revaluation disclosures coincided with earnings announcements, and weak performance triggered stock declines.
Analyst Identifies Conditions for Positive Stock Impact from Revaluation
Eom Su-jin, a researcher at Hanwha Investment Securities, stated that asset revaluation acts as positive news for stock prices when the purpose is clear and benefits outweigh costs. Examples include revaluing assets to improve credit ratings for investment in promising businesses, or conducting revaluations to boost stock prices in response to minority shareholder demands.
FAQ
What did the 18 Korean companies do in the first half of the year?
The 18 companies disclosed asset revaluation results in the first half of the year, with eight stocks rising, nine declining, and one unchanged after the announcements.
Why did Daewon Hwaseong's stock rise on the 18th of last month?
Daewon Hwaseong's stock rose 29.98% to 3,945 won after the company disclosed that its Osan land revaluation increased book value from 36.3 billion won to 91 billion won.
What conditions did Hanwha Investment Securities identify for positive stock reactions to revaluation?
Researcher Eom Su-jin stated that revaluation acts as positive news when the purpose is clear and benefits exceed costs, such as improving credit ratings for business investment or responding to minority shareholder demands to support stock prices.
