Kook Soon-dang Co, famous in South Korea for its traditional rice wines, is winning over investors as overseas fund managers drove its shares up 50 percent in the past five weeks.
Since October, foreigners more than doubled their stake in the company to about a fifth of its available shares in the over-the-counter KOSDAQ market. Local individual investors typically account for about 95 percent of daily trade in KOSDAQ companies.
"There were practically no appointments with foreign fund managers at the beginning of the year," said Choi Sung-Hyun, who's in charge of investor relations at Kook Soon-dang. "This week I have meetings with five overseas fund managers. Sometimes it's seven or eight a week."
Kook Soon-dang's rally has surpassed the KOSDAQ index's gain by some 20 percent since October following the company's campaign to attract foreign investors. The stock yesterday added 2.4 percent to 25,850 won, bringing its gains to 148 percent this year as investors bet on the company's earnings growth, lucrative dividends, and a growing market share of its flagship brand.
The company's Paeksaeju, or "100-year wine," is considered Korea's first commercially successful rice wine as it's normally made at home or in small distilleries. About 2.5 times more expensive than the chemical-tasting soju, Paeksaeju includes herbal ingredients that are said to be good for one's health.
"Kook Soon-dang consolidated and developed the traditional rice wine market," said Kang Shi-Whang, who manages US$40 million at Singapore-based Arisaig Partners Asia Pte.
Two Arisaig funds hold a combined 6.9 percent stake in Kook Soon-dang, making it the company's single largest foreign shareholder.
Part of the reason Arisaig started buying Kook Soon-dang shares this year at around 15,000 won a share is because of the brewer's generosity in rewarding its shareholders, Kang said. Last year, the company gave an 80 percent cash dividend plus a 10 percent share dividend..
"The company's prospects look good," Choi said.
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