[Click eStock] 'Jokyanan' Kumho Petrochemical's Dividend Feast

Park Cheol-wan, Executive Director at Kumho Petrochemical

[Asia Economy Reporter Hwang Junho] Kumho Petrochemical announced at the board meeting held on the 9th that it will maintain a dividend payout ratio of 20-25% for the next 2-3 years, raising expectations that this year's dividend could be around 8,000 KRW per share. Ahead of the regular shareholders' meeting scheduled for the 26th, Kumho Petrochemical Chairman Park Chan-gu and his nephew, Executive Director Park Cheol-wan, are engaged in a management rights dispute, entering a battle over dividend policy. Additionally, with this year's performance expected to improve by about twofold, it is anticipated that such a level of dividend payout will be possible.

Yoon Jae-sung, a petrochemical analyst at Hana Financial Investment, stated on the 10th, "There is a high possibility of significant improvement in operating profit on a separate basis this year (synthetic rubber + synthetic resin + energy/others), and even considering the company's raised dividend payout ratio, a high dividend yield is possible."

Kumho Petrochemical proposed at the board meeting a dividend of 4,200 KRW per common share (dividend yield 3%) and 4,250 KRW per preferred share (dividend yield 7.8%). In 2019, the dividend per common share was only 1,500 KRW with a dividend yield of 1.9%.

However, Executive Director Park Cheol-wan submitted a shareholder proposal for dividends of 11,000 KRW per common share and 11,050 KRW per preferred share. Legal proceedings regarding the validity are ongoing in court, and if approved, it will be disclosed with corrections and submitted to the shareholders' meeting. The result is expected this week.

Analyst Yoon estimated, "Kumho Petrochemical's operating profit on a separate basis this year is expected to more than double compared to the previous year," adding, "Considering the company's proposed dividend payout ratio, a conservative estimate for the 2021 dividend is around 8,000 KRW per common/preferred share (4%/10%)."

In particular, "If Executive Director Park Cheol-wan's shareholder proposal regarding dividends is accepted by the court, it will be submitted as the first agenda item, potentially expanding the dividend yield further," he evaluated, "In both cases, it is positive from the shareholders' perspective as dividend yield enhancement is possible."