[Public Notice+] Shinseong Tongsang 2nd Generation Expands Stake Again Through Major Shareholder 'Ganaan'

[Asia Economy Reporter Lee Seon-ae] Continuous share purchases by the second generation of Shinseong Tongsang have drawn attention to the background.

According to the Financial Supervisory Service on the 19th, Ganaan disclosed that it purchased 330,000 shares of Shinseong Tongsang, increasing its holdings to 55,507,091 shares. Accordingly, Ganaan's stake in Shinseong Tongsang expanded from 38.40% to 38.63%.

Ganaan is the largest shareholder of Shinseong Tongsang. The largest shareholder of Ganaan is Yeom Sang-won, the eldest son of Yeom Tae-soon, chairman of Shinseong Tongsang, holding 82.43% of the shares. In effect, Ganaan, where Mr. Yeom is the largest shareholder, has been steadily purchasing Shinseong Tongsang shares, solidifying its control without burden.

On the 14th, Ganaan also purchased 290,000 shares, expanding its holdings in Shinseong Tongsang to 55,177,091 shares, with a stake of 38.40%, according to a disclosure. Consequently, Ganaan's stake in Shinseong Tongsang increased from around 33.9% at the end of June last year to 37.99%, surpassing 38% earlier this year.

With Ganaan's stake increase on this day, the total shareholding of Shinseong Tongsang's largest shareholder and related parties (Chairman Yeom Tae-soon 8.21%, Ganaan 38.4%, Easion Fashion 17.66%, children Yeom Hye-young 3.30%, Yeom Hye-geun 3.30%, Yeom Hye-min 3.30%, son-in-law Park Hee-chan 0.10%) expanded from 74.28% to 74.51%.

The continuous share purchases by the owner family have also raised interest in the succession of the second generation. However, Shinseong Tongsang cautions against overinterpretation, stating that Ganaan's purchase of Shinseong Tongsang shares is unrelated to succession, maintaining the position that "shares were recently purchased as the stock price was judged to be low (undervalued corporate value) to support the stock price."

Meanwhile, Shinseong Tongsang is set to enter the era of operating profit exceeding 100 billion KRW for the first time this year. Recently, the management of Shinseong Tongsang shared a message with the company's management-level employees about the expected operating profit of 100 billion KRW for the first time this year.

Shinseong Tongsang, a company with a fiscal year ending in June, recorded sales of 1.2 trillion KRW and operating profit of 74.3 billion KRW in the last fiscal year (July 2020 to June 2021), demonstrating a significant improvement in profitability. Operating profit nearly doubled compared to the previous year (39.8 billion KRW), and to commemorate this, a special performance bonus equivalent to 300% of the base salary was recently paid to all employees. In particular, employees in charge of the leading brand Topten, which spearheaded the performance improvement, received 400%.

For this fiscal year (July 2021 to June 2022), operating profit is expected to surpass 100 billion KRW. Leading Investment & Securities forecasts sales to increase by 17.5% to 1.41 trillion KRW and operating profit to surge by 76.3% to 131 billion KRW for this fiscal year.

This marks an earnings surprise for two consecutive years. Topten has grown into one of the top SPA brands domestically over the past two years. While major competitor Uniqlo's sales sharply declined due to rising anti-Japanese sentiment in Korea following Japan's economic retaliation starting in July 2019, Topten benefited from this and has become a leading domestic SPA brand.