Shares of Lotte Shopping, a key affiliate of retail-focused conglomerate Lotte Group, shot up Wednesday on hopes the unit would benefit from the group's plan to list its hotel arm Hotel Lotte.
  

Lotte Shopping ended at 241,000 won ($202.3) on the main KOSPI, up 7.83 percent from the previous session and gaining for a second straight session. The KOSPI shed 0.56 percent.
  

Shares of Lotte affiliates widely advanced on Wednesday following Lotte Group Chairman Shin Dong-bin's apology over an ongoing succession feud. Lotte Shopping spiked 9.29 percent to 223,500 won, while Lotte Confectionery jumped 9.27 percent to 1,945,000 won.
  

Analysts said investors snapped up the share on the hopes the retail affiliate will play a pivotal role in the company's move to list Hotel Lotte as part of efforts to reform its criticized governance structure.
  

The country's fifth-largest conglomerate has been mired in a bitter family dispute among founder Shin Kyuk-ho and his two sons, Dong-joo and Dong-bin, to gain control of the group.
  

The ugly dispute reignited public fury over the murky governance structure at the country's family-controlled conglomerates, prompting the government to launch an all-out probe into Lotte.

In a bid to weaken the sentiment, Shin Dong-bin, who is in charge of Lotte's businesses here, apologized on Wednesday for the scandal and vowed to simplify its governance structure and reinforce corporate transparency.
  

The plan included the listing of Hotel Lotte, which serves as the group's de-facto holding company in Korea. Shin did not specify a schedule for the listing.
  

He also pledged that the group will try to unwind about 80 percent of circular shareholding among its units, which is cited as the main reason for its knotty ownership structure.
  

"Lotte Group may solely turn Hotel Lotte into its holding firm. But it may also involve other affiliates, such as Lotte Shopping and Lotte Confectionery, which is a more complicated but cheap process," said Kim Dong-yang, an analyst at NH Investment & Securities.
  

Lee Sang-heon, an analyst at HI Investment & Securities, backed the view.
  

"The core of the governance reform will involve Hotel Lotte and Lotte Shopping. Hotel Lotte is acting as the de facto holding firm, while Lotte Shopping holds a stake in key affiliates," he said.
  

The hotel unit holds an 8.83 percent stake in Lotte Shopping, a 12.99 percent stake in Lotte Aluminium and a 18.77 percent stake in Lotteria. Meanwhile, Lotte Holdings, the group's Tokyo-based holding firm, holds a 19.07 percent stake in Hotel Lotte, while group investment units called L Investment Company hold a combined 72.65 percent stake.
  

Hotel Lotte, established in 1973, reaps roughly 84 percent of its sales from Lotte Duty Free, the country's biggest duty-free chain. Its financial and tangible assets are valued at over 11 trillion won, according to an analysis by HI Investment & Securities. (Yonhap)