GP Club Continues Equity Investments for Business Diversification

Last Month, KOSDAQ-Listed Korea Miracle People Acquired
Existing Subsidiary JORR&D Shares Exchanged
Participated in AT Semicon Capital Increase to Secure 10.4% Stake

[Asia Economy Reporter Hyungsoo Park] GP Club, a domestic cosmetics company famous for 'JM Solution,' is continuing its investments for business diversification. After participating in a paid-in capital increase of the KOSDAQ-listed company AT Semicon and securing a 10% stake, it acquired the KONEX-listed company Korea Miracle People. This move appears to be an effort to expand its business areas and continue growth amid fluctuating preferences for domestic cosmetics brands in China.

According to the Financial Supervisory Service's electronic disclosure system on the 18th, GP Club signed a stock exchange agreement with Lee Ho-kyung, the largest shareholder of Korea Miracle People, on the 26th of last month. They exchanged 660,000 shares of Korea Miracle People held by Lee and 105 shares of JO R&D held by GP Club. GP Club additionally paid Lee 1.884 billion KRW in cash. The total transaction amount was 6.456 billion KRW. Korea Miracle People shares were acquired at 9,782 KRW per share. GP Club secured a 55.77% stake, becoming the largest shareholder.

Korea Miracle People (KMPC) is a company that directly develops, manufactures, and sells eco-friendly detergents such as the kitchen detergent 'Eunnano Step' and laundry detergent 'Top Step.' It exports directly and indirectly to 18 countries including the United States, China, and Southeast Asia. The products are sold through overseas home shopping channels and are listed on Amazon in the U.S. and QOO10 in Singapore. Last year, it recorded sales of 22.5 billion KRW and an operating loss of 2.2 billion KRW. Sales decreased by 29.3% compared to the previous year, and it turned to a loss.

As of the end of last year, GP Club held 100% (1,835 shares) of the cosmetics company JO R&D. It transferred 105 shares, equivalent to 5.7% of the stake, to Lee Ho-kyung, CEO of Korea Miracle People. The stock value was set at 43.53 million KRW per share. The stock value of JO R&D was evaluated by Ichon Accounting Corporation. JO R&D achieved sales of 94.9 billion KRW and operating profit of 4.3 billion KRW last year. While sales decreased by 9.9% compared to the previous year, operating profit increased by 52.4%.

Earlier, GP Club invested 7.5 billion KRW in AT Semicon's paid-in capital increase last month and acquired 7,485,030 new shares (a 10.36% stake). After completing the capital increase, AT Semicon will hold an extraordinary general meeting of shareholders on the 9th of next month to discuss agenda items such as amendments to the articles of incorporation and director appointments. AT Semicon is reorganizing its existing semiconductor packaging business and promoting secondary battery-related businesses.

GP Club invested about 14 billion KRW in acquiring stakes in other companies last month alone. The reason for focusing on business diversification while transferring some stakes in major affiliates is related to the deterioration of performance in the existing cosmetics business. Sales surged in 2016 when the 'Honey Glow Mask' became wildly popular in China. However, profits have been declining since 2018 due to the THAAD dispute and the COVID-19 pandemic. Although sales increased by 32.4% last year compared to the previous year, operating profit decreased by 45.9%.

As of the end of last year, the company held cash and cash equivalents amounting to 153 billion KRW. It is expected that attempts to diversify the business using this substantial cash will continue.