Kiwoom shares tumble on uncollected money from Young Poong Paper investors

[Courtesy of Kiwoom Securities]

Kiwoom Securities saw an early morning plunge in its stock price on Monday amid reports of a substantial sum of uncollected money due to Young Poong Paper Mfg Co.’s trading suspension.

At 9:22 a.m. in the Korea Exchange’s morning session on October 23, Kiwoom Securities shares traded at 79,500 won ($58.7), down by 20.74 percent compared to the previous day.

Kiwoom Securities said in a statement on Oct. 20, its uncollected money from clients’ entrusted accounts totaled 494.3 billion won due to Young Poong Paper’s trading halt. The brokerage firm intends to recover the outstanding amount through forced margin transactions.

Young Poong Paper, which saw a remarkable increase in its stock price of over 700 percent earlier this year, recorded a trading halt on October 18 after reaching its lower price limit and financial authorities subsequently suspended trading in the stock on October 19.

Taking into account the uncollected money, KB Securities revised Kiwoom Securities’ estimated annual operating profit for 2023 downwards, downgrading its target share price from 130,000 won to 123,000 won.

Kiwoom Securities’ estimated annual operating profit for this year has been adjusted downward from 950 billion won to 731 billion won.

Given that Young Poong Paper’s parent company has secured equity loans from banks with the paper manufacture’s shares as collateral, it is possible that the creditor banks will sell more of the shares, which could mean a further decline in Young Poong Paper’s share price and increased losses for Kiwoom Securities, SK Securities analyst Sul Yong-jin said.