What is the Financial Power of Asung HMP, Which Invested 500 Billion Won to Acquire Shares in Daiso?

Ownership structure from Park Jeongbu, Park Youngju, Park Suyeon → Asung Co., Ltd. → Asung HMP → Asung Daiso
Asung HMP cash assets 62.7 billion KRW, book value of Asung Daiso shares 513.4 billion KRW
No record of loans secured by shares... Possible acquisition of shares through asset securitization

Asung HMP, the parent company of Daiso (Asung Daiso), known as the "people's store," has attracted significant market attention for its financial strength after acquiring a stake in Japan's Daichang Sangyo (Daiso Sangyo) for 500 billion KRW.

According to the financial investment industry, Asung HMP, the largest shareholder holding 50.02% of Asung Daiso's shares, purchased 34.21% of Daichang Sangyo's shares, the second-largest shareholder. The purchase price is reported to be 500 billion KRW. This values the entire enterprise of Asung Daiso at approximately 1.4 trillion KRW.

With this share acquisition, Asung HMP's stake increased to 84.23%. The remaining shares are held by Park Jung-bu, chairman of Daiso, and his two daughters, Park Young-joo (13.9%) and Park Soo-yeon (1.87%). The 100% largest shareholder of Asung HMP is Asung Co., Ltd. The shareholder structure of Asung has not been disclosed since 2013. At that time, Chairman Park held 10%, and his two daughters each held 45% in this family company. Ultimately, this acquisition of Daiso Sangyo shares means that Chairman Park's family now owns the entirety of Asung Daiso.

Industry insiders expect that this share acquisition will completely remove the image of Daiso as a Japanese company. It is also analyzed that management interference, such as Daichang Sangyo demanding dividend payments and including board members, will be cut off.

From Daichang Sangyo's perspective, it also earned high profits. In 2001, Daichang Sangyo invested 400 million yen (approximately 3.8 billion KRW) in Chairman Park's lifestyle goods store "Asco Even Plaza," securing a 34.21% stake. After 22 years, it sold the stake for 500 billion KRW, achieving a return of about 13,000%.

The market's attention is focused on how Asung HMP financed the purchase of Daichang Sangyo's shares. Asung HMP purchases daily necessities and miscellaneous goods from Korea, China, Europe, and India and sells them in Korea and Japan. As of last year, it recorded sales of 685.7 billion KRW and an operating profit of 47.4 billion KRW. Most of the sales come from Asung Daiso. The amount Asung HMP sold to Asung Daiso last year was 523.3 billion KRW, accounting for about 76% of total sales.

Asung HMP's total assets amount to 763.4 billion KRW. Its cash and cash equivalents, including short-term financial products, total 62.7 billion KRW. It is presumed that asset securitization was carried out to cover the share purchase amount. First, the largest part of Asung HMP's assets is its stake in Asung Daiso. The book value of the 50.02% stake in Asung Daiso is 513.4 billion KRW. There is no record of loans secured by this stake, so it is possible that it was used as collateral.

Other assets that can be securitized include accounts receivable worth about 70 billion KRW. Most of these receivables are Asung Daiso's credit sales. Asung Daiso held more than 500 billion KRW in cash as of the end of last year, so the probability of these receivables becoming non-performing is low. Additionally, Asung HMP owns land and buildings worth 55 billion KRW in Yongin, Gyeonggi Province. However, it has a loan of about 40 billion KRW from the Korea Development Bank secured by this property, making securitization difficult.

It is also unlikely that financial support from Asung, Asung HMP's parent company, will be forthcoming. Most of Asung's assets consist of shares in Asung HMP. Its cash and cash equivalents are about 8.1 billion KRW. Asung also derives 99% of its sales from Asung Daiso. It generates an average operating profit in the 10 billion KRW range but does not accumulate cash due to capital reductions and dividend payments.

Meanwhile, a representative of Asung Daiso stated, "We cannot disclose specific details about the share purchase price and financing methods."