Hyosung Chairman Cho Hyun-joon Purchases 370,000 Shares of Galaxia SM After 7 Years (Comprehensive)

25 Consecutive On-Exchange Purchases Worth 680 Million KRW
Cho Hyun-joon → Trinity Asset → Galaxia SM
New Business Started Last Year... Net Profit Up 274%

[Asia Economy Reporter Choi Seoyoon] Interest is focused on the background as Hyosung Group Chairman Cho Hyun-joon has been consecutively purchasing shares of Galaxia SM, which he had attempted to sell, after seven years. Galaxia SM is one of the so-called 'Galaxia Group' affiliates independently managed by Chairman Cho in a small group format. Chairman Cho holds 80% of the shares of Trinity Asset Management, the largest shareholder of Galaxia SM, forming a structure of Chairman Cho → Trinity Asset Management → Galaxia SM.

According to the Financial Supervisory Service's electronic disclosure system on the 22nd, Chairman Cho purchased Galaxia SM shares listed on the KOSPI market 25 times from June 29 to the 12th of this month, amounting to 680 million KRW (365,913 shares). Chairman Cho's stake increased from 7.07% to 8.4%.

The stock price of Galaxia SM, which had fallen to 1,475 KRW in June, began to rise as Chairman Cho acquired shares, increasing by 14% to 2,035 KRW as of the 19th. A Galaxia SM official stated regarding Chairman Cho's share purchase that it was "to enhance shareholder value."

Galaxia SM was incorporated into the Hyosung Group as an affiliate in 2011 after Trinity Asset Management, wholly owned by the three brothers Cho Hyun-joon, Hyun-moon, and Hyun-sang, acquired 17.84% of the shares in November 2008 and subsequently increased its stake. Trinity Asset Management, holding 22.41%, is the largest shareholder, followed by Chairman Cho, Shindongjin Co., Ltd., and Hyosung Vice Chairman Cho Hyun-sang in order of shareholding.

Chairman Cho first became a shareholder in 2013 by purchasing 700,000 shares over-the-counter from President Lee Hee-jin, co-founder of IB Worldwide. On the same day, his younger brother Vice Chairman Cho Hyun-sang also purchased shares, and in November 2015, the company changed its name to Galaxia SM.

Due to continued losses, there have been rumors of a sale for the past three years. During the height of these rumors in July 2019, the stock price once surged to the upper price limit (29.95%). However, in a disclosure on the 16th, it was announced that "the largest shareholder considered selling shares but ultimately confirmed no intention to sell," effectively ending the sale rumors.

Chairman Cho Hyun-joon of Hyosung. Photo by Yonhap News

The company's performance, which had been sluggish for years, has recently improved. As of last year, sales reached 28.9 billion KRW with an operating profit of 3.5 billion KRW, increasing by 48% and 151% respectively compared to the previous year. Net profit recorded 3.7 billion KRW, up 274%.

The strong performance has continued into the first half of this year. Sales increased by 6.5% to 13.2 billion KRW, and operating profit rose by 122% to 2 billion KRW. The company explained that the improvement in performance was due to successful health equipment sales and golf-related businesses (such as golf practice range operations) benefiting from COVID-19-related demand.

Galaxia SM, with 64 employees, was previously a company whose entire revenue came from sports marketing, but after signing an exclusive domestic distribution contract with TechnoGym, the world's number one fitness equipment company from Italy, in January last year, it started the health equipment sales business. As of the first half of this year, the sales composition changed to 54% sports marketing and 46% health equipment sales.

Professor Kim Woo-chan of Korea University Business School said, "Chairman Cho is personally increasing his direct ownership of shares in a company whose performance is improving through new businesses, rather than Trinity Asset Management, the largest shareholder of this company, buying the shares. This appears to reflect Chairman Cho's intention to maximize future profits by increasing his personal stake in the company."