Hanjin KAL shares swing wildly as control battle with Hoban Group heats up

Shares of Hanjin KAL, the holding company of Hanjin Group, have been swinging sharply as the company enters a fresh management control dispute with Hoban Group. With a new race to accumulate shares igniting — following a 2020 battle with a three-way shareholder alliance and last year's stake competition with Hoban — retail investors have been piling in aggressively. Analysts warn, however, that blind momentum buying carries serious risk, given that past control-battle rallies at Hanjin KAL have consistently ended in steep selloffs.

According to Korea Exchange, Hanjin KAL hit the daily upper limit — gaining 29.97% — on Tuesday. The surge followed a 16.3% jump on Monday, when news broke that Hoban Group had filed for a business combination review with the Korea Fair Trade Commission in connection with a change in the largest shareholder, compounded by reports that Hanjin Group Chairman Cho Won-tae had begun buying shares defensively. Hanjin KAL preferred shares also hit the daily upper limit on both Monday and Tuesday — two consecutive sessions.

Shares continued to move higher Wednesday but with wide swings. Hanjin KAL fell as much as 7.59% early in the session to 161,900 won ($121) before recovering to 175,300 won, up 0.06%, as of 9:30 a.m. The preferred shares dropped 3.59% at the open before turning sharply higher, rising more than 14%.

Since 2020, the number of days Hanjin KAL has hit the daily upper limit can be counted on one hand: March 20, 27 and 30, 2020; May 13 and 14 last year; and Tuesday.

Every instance was directly tied to a group governance or management control dispute. The concern, as past cases make clear, is that shares that surge on control-battle momentum have tended to collapse just as quickly once the catalyst fades or buying interest dries up.

The management control battle over Hanjin Group intensified after the death of late group patriarch Cho Yang-ho in April 2019. Tensions peaked in March 2020, when a dispute between Chairman Cho Won-tae and a three-way shareholder alliance led by former Korean Air Vice President Cho Hyun-ah drove the stock to repeated daily upper-limit gains.

After Cho Won-tae secured re-election as an inside director at the March 20, 2020 shareholders' meeting, the stock hit the upper limit that day and rose another 9.38% the following session — only to plunge 26.93% in a single day on March 24.

The three-way alliance then announced it would continue buying shares regardless of the chairman's re-election, sending the stock to back-to-back upper-limit gains on March 27 and 30. That rally also proved short-lived: the stock tumbled 10.62% on April 2 and another 5.52% on April 3.

The same pattern played out during last year's stake competition with Hoban Group in May. After Hoban acquired additional Hanjin KAL shares and narrowed the gap with Cho's side to roughly 1 percentage point, the stock hit the daily upper limit on two consecutive sessions — May 13 and 14.

The very next day, May 15, the stock tumbled 17%, giving back most of its gains. Hoban Group had previously become the second-largest shareholder in Hanjin KAL by purchasing a stake from KCGI, a private equity fund that had formed a shareholder alliance with former Vice President Cho Hyun-ah, in 2022.

Despite the extreme volatility, retail investors have treated the dispute as a short-term catalyst and moved in aggressively. Over the two most recent trading sessions — Monday and Tuesday — retail investors net purchased 16.58 billion won worth of Hanjin KAL shares on the Kospi, placing the stock 12th on the list of top net-purchased names by retail investors. Given the stock's normally thin trading volume, that ranking is highly unusual. Over the same period, foreign investors moved in the opposite direction, net selling 17.68 billion won worth of shares to lock in profits.

In Hanjin KAL preferred shares, retail investors net purchased 321 million won while foreign investors net sold 264 million won — again moving in opposite directions.

"If Hoban continues buying on the open market, the share price could rise further in the short term, but the risk of a sharp reversal also grows once the buying stops," said Park Se-yeon, an analyst at Hanwha Investment & Securities. "Investors should watch for Hoban's stake disclosure, the settlement of Chairman Cho Won-tae's purchases, and any changes in Korea Development Bank's shareholding."

Kim Su-hyeon, an analyst at DS Investment & Securities, said Hoban is again asserting its presence in the market as a major shareholder, even if an immediate takeover is not its goal. "Hoban has no reason to rush to resolve this situation," Kim said, adding that the stock could continue to be driven more by market interpretation than by facts — potentially all the way through next year's annual shareholders' meeting, when a cumulative voting system is set to be introduced.