Investors keen on profiting ahead of Korea-listed Korea Zinc’s intensifying proxy battle next month are pushing the zinc smelter’s stock to the top of a global equity index.
Korea Zinc’s shares jumped as much as 12% on Thursday to reach a fresh high, extending its year-to-date surge to roughly 270%.
An eight-day stretch of advances is its best winning streak in over two years, doubling the stock’s value and making it the best performer on MSCI’s gauge of world equities over that period.
The company’s largest shareholder, Young Poong, joined forces with private equity firm MBK Partners in September to launch a tender offer to take control of the board’s management.
The move took chairman Yun B. Choi and his allies by surprise and triggered a takeover battle with several counteroffers as no side backed down.
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“The stock price level is just inexplicable and unsustainable”, said Kim Dojoon, chief investment officer at Zian Investment Management in Seoul.
Stock is changing hands at a premium as “each stock can be a casting vote” in the management decision, according to Kim.
The extraordinary general meeting is scheduled for Jan 23, with the list of shareholders who can cast vote closing on Dec 20.
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The stellar run has seen the stock trade at a valuation almost double the median among its global peers and about six times more than the benchmark Kospi index, which trades at about eight times its forward earnings, according to data compiled by Bloomberg.
Analysts are predicting that shares may fall by 66% over the next 12 months, according to average analyst forecasts compiled by Bloomberg. Still, the stock has 14 buys, six holds and just one sell rating.
