[Governance] ANP Completes 2nd Generation Succession... Will It End 6 Years of Deficits?

[Asia Economy Reporter Jang Hyowon] Printed circuit board (PCB) manufacturer A&Pi has completed its second-generation succession process and is entering new business areas such as drama and entertainment content production. Since its existing business has been running at a loss for six consecutive years, there is growing interest in A&Pi's future business performance.

According to the Financial Supervisory Service's electronic disclosure on the 3rd, the largest shareholder of KOSPI-listed company A&Pi has changed from CEO Jeon Woon-kwan and three others to YSP and three others. On the 30th of last month, YSP conducted a third-party allotment capital increase worth 10 billion KRW, becoming the largest shareholder.

CEO Jeon Woon-kwan's number of shares remains at 1,606,472, but his stake decreased from 7.19% to 5.53% due to the capital increase. YSP secured a total of 8,304,464 shares (28.59%), combining the shares it previously held in A&Pi and those received through the capital increase.

YSP is a company engaged in manufacturing and exporting automotive parts and packaging, and is a corporation wholly owned by CEO Jeon Hak-su, the son of CEO Jeon Woon-kwan. Last year, on a consolidated basis, it recorded sales of 82 billion KRW and operating profit of 8.6 billion KRW.

However, A&Pi has been struggling with losses for six years. Since turning to a loss in 2017 with sales of 91.7 billion KRW and an operating loss of 4.5 billion KRW, its performance has declined every year. Last year, A&Pi recorded sales of 69.3 billion KRW and an operating loss of 12 billion KRW.

A&Pi primarily operates in the manufacturing and sales of printed circuit boards (PCBs) used in automotive electronics, communication equipment, and computers. PCB sales account for 94.6% of its revenue. Major customers, including Hyundai Mobis, Hyundai Kefico, Korea Alps, and Denso Korea Electronics, make up 80% of total sales.

According to the Ministry of Trade, Industry and Energy, the domestic PCB market size was 10.8 trillion KRW last year, a 3.4% increase from the previous year. Nevertheless, A&Pi's sales have decreased, and its operating losses have expanded.

In response, A&Pi is undertaking structural improvements. First, at the regular shareholders' meeting in March, it added new business purposes such as social casino games, blockchain, NFTs (non-fungible tokens), and drama, film, and music production. It also recruited former Phantom Entertainment Chairman Lee Dohyung, who was previously convicted for involvement in PD Lobby, embezzlement, and stock manipulation.

Additionally, on the 25th of last month, A&Pi announced it would invest 8 billion KRW to establish ‘Studio2046’. Through this company, it aims to discover new revenue models in the content, gaming, and NFT markets. According to industry sources, Studio2046 is planning dramas and entertainment shows.

The company’s CEO is Yoon Sang-jun, and former Chairman Lee Dohyung is listed as an inside director. Auditor Cho Sung-bin, a former director of DreamT Entertainment, was appointed. DreamT Entertainment was delisted from the KONEX market in 2020. Auditor Cho also served as CFO at Arion, which is currently suspended from trading, in 2017.