"Stock Prices Plummet Due to Corona"... Owners Buying Back Large Amounts of Treasury Shares

Huh Se-hong, President of GS Caltex, Buys Shares Over a Month

Shareholding Ratio Rises from 1.51% to 2.01%, Second Largest Among Fourth-Generation Owners

[Asia Economy Reporter Ko Hyung-kwang] As the domestic stock market fluctuated significantly due to the impact of COVID-19 and other factors, owner families of listed companies have been purchasing large amounts of their own company shares. While these companies emphasize this as responsible management and enhancing shareholder value, some interpret it as a strategic move to facilitate succession by buying shares at a low price rather than directly gifting listed company stocks.

According to the Financial Supervisory Service's electronic disclosure system on the 8th, GS announced that on the 6th, Huh Se-hong, President of GS Caltex, purchased 20,000 GS common shares on the market. It also disclosed plans to buy 14,133 shares on the 9th.

Huh, the eldest son of Huh Dong-soo, Chairman of GS Caltex and a fourth-generation owner of the GS Group, previously bought 81,900 shares from March 5-6, 24,000 shares from March 11-19, and 335,210 shares from March 24 to April 4. In the past month, he purchased a total of 475,243 GS shares (approximately 20 billion KRW). During this period, his GS shareholding ratio rose from 1.51% to 2.01%, an increase of 0.5 percentage points. Among the fourth-generation owners of GS Group, he now holds the second largest GS stake after Huh Jun-hong, CEO of Samyang Corporation (2.20%).

Huh Seo-hong, Executive Director of GS Energy, also purchased 92,000 GS shares on the market in the past month, among several fourth-generation owners of GS Group who have acquired significant stakes in the group's holding company, GS Corporation. Considering that GS stock price has dropped more than 20% since the beginning of this year, reaching a five-year low at 40,000 KRW on April 6, they appear to be increasing their holdings.

In the case of Daekyo, famous for its "Noonnopi Learning Materials," Chairman Kang Young-joong disclosed that he purchased about 530,000 treasury shares over a month from January 31 to February 28. Kang's stake in Daekyo increased from 8.93% (9,299,570 shares) to 9.44% (9,829,933 shares), a 0.51 percentage point rise. This seems to be more for responsible management rather than expanding control. Daekyo's holding company, Daekyo Holdings, owns 54.5% of the shares, and Kang owns 82% of Daekyo Holdings, making the governance structure solid.

Cement manufacturer Sungshin Cement also disclosed that at the end of last month, Kim Tae-hyun, Vice Chairman, and Kim Seok-hyun, Vice President, sons of Chairman Kim Young-jun, purchased 61,728 shares (0.25%) and 153,259 shares (0.63%) respectively on the market. As the succession process is underway and the stock price continues to fall, they appear to be increasing their stakes during this period. Sungshin Cement's recent stock price has dropped more than 50% compared to a year ago (13,600 KRW).

Hong Seok-pyo, Vice President of Korea Steel, acquired 400,000 shares (2%) of the company stock in early last month. Half of these, 200,000 shares, were gifted by his father, Chairman Hong Young-chul, the largest shareholder of Korea Steel, and the other half were purchased on the market for about 3.5 billion KRW. As Korea Steel's stock price plunged more than 40% from last year's peak, it is analyzed that he increased his stake through both gifting and market purchases.

Earlier, Jung Yoo-kyung, General Manager of Shinsegae Department Store Division, purchased 50,000 Shinsegae common shares (about 13 billion KRW) on the market over three days at the end of January. Jung's shareholding ratio rose from 9.83% (967,853 shares) to 10.34% (1,017,853 shares). The largest shareholder of Shinsegae is Chairman Lee Myung-hee (18.22%), followed by the National Pension Service (14.37%), with Jung being the third largest.

Additionally, Yoon In-ho, Executive Director and eldest son of Yoon Do-jun, Chairman of Dongwha Pharm, purchased 51,500 company shares at the end of last month, and Lee Geon-young, eldest son and second largest shareholder of Daehan Flour Mills founder Lee Jong-gak, bought 4,378 treasury shares.

Most of the listed companies where owners have purchased treasury shares emphasize it as responsible management and enhancing shareholder value. Industry insiders also view the acquisition of treasury shares by major shareholders positively. An industry official explained, "When those who know the company best buy shares, it can be interpreted as a sign of confidence in the company's performance and growth," adding, "This can signal that the company's stock is undervalued relative to its performance, which can positively affect the stock price."

However, some point out that there is also an intention to facilitate succession by buying shares when prices are low rather than directly gifting listed company stocks. Another insider said, "Treasury share purchases to expand the owner's family stake tend to occur when stock prices are at their lowest," and "For children inheriting management rights of listed companies, this is an opportunity to reduce succession costs and increase their stake."