Kumho group units rally on news of Daewoo Eng sale

* Daewoo Engineering shares hit nine-month peak

* Shares in firms belonging to Kumho Asiana were undervalued

* KDB private equity fund expected to buy Kumho Daewoo stake

SEOUL, June 29 (Reuters) - Shares in companies belonging to South Korea's Kumho Asiana Group rallied on Monday on hopes that the sale of Daewoo Engineering & Construction Co (047040.KS) will ease investor worries about its liquidity.

The uncertain outlook for Kumho Asiana, a petrochemicals-to-airline conglomerate which bought the construction company for about 6.4 trillion won ($5.0 billion) in 2006, has weighed on the group's units.

The announcement of the sale on Sunday [nSEO340774] boosted Daewoo and other Kumho units.

Daewoo Engineering shares hit a nine-month high and were up 13.2 percent at 14,550 won at 0150 GMT, outperforming the wider market's 0.47 percent rise after reaching its daily limit of 15 percent.

Kumho Industrial (002990.KS) and Kumho Petrochemicals (011780.KS) rose 8.1 percent and 5.4 percent respectively.

"In terms of share prices it's certainly good news for Daewoo Engineering," said SK Securities analyst Kim Seok Jun.

"Daewoo has been running its business soundly but the stocks were undervalued due to risks attached to its group risk."

Kumho holds about 33 percent of Daewoo, with financial investors holding 39 percent.

Kumho may consider various ways to unload Daewoo including the sale of a 39 percent stake held by financial investors including management rights, the sale of a 50 percent stake plus one share, and the sale of a 72 percent stake owned by the group and financial investors.

Kumho Asiana said in a statement on Sunday that it plans to consider a tender offer or a sale to a planned private equity fund set up by state-run Korea Development Bank (KDB), its main creditor.

"The market's consensus is that eventually KDB's private equity fund will buy Kumho's Daewoo stake," said Lee Sun-il, an analyst at Goodmorning Shinhan. "No one can easily invest trillions of won under current business conditions."

"If one looks at potential corporate buyers, they would likely be among the top 10 business groups," Lee said, adding that big conglomerates may benefit from having a construction unit that can handle internal orders.

But analysts cautioned that the sale of Daewoo would not be an easy feat, particularly in the current business climate.

"The news can help Daewoo Engineering in the short term," said Hyundai Securities analyst Lee Chang-keun in a research note on Monday.

"But Daewoo's corporate value has fallen since the acquisition by Kumho Asiana and it is unlikely for a buyer to step in given the weak construction industry and the sale of Hyundai Engineering."

Creditors of Hyundai Engineering and Construction (000720.KS) are planning to sell the builder.

(Additional reporting by Shin Ji-eun)

(Reporting by Kim Yeon-hee and Rhee So-eui, writing by Marie-France Han; Editing by Dhara Ranasinghe)

((mf.han@thomsonreuters.com; +82 2 3704 5667; Reuters Messaging: mf.han.reuters.com@reuters.net))

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