[Column] Kim Seung-yeon's Bold Decision... The Time for Proof Has Come

"There might be shouting and paper bundles thrown."

Last month, ahead of the Hanwha Aerospace shareholders' meeting, a Hanwha Group official expressed concerns. Just before the meeting, Hanwha Aerospace announced a paid-in capital increase of 3.6 trillion won, the largest ever in the history of the domestic capital market, causing the stock price to plummet. They were anxious about how the shareholders' anger would manifest.

In particular, a week before the paid-in capital increase announcement, Hanwha Aerospace acquired a 7.3% stake in Hanwha Ocean, held by companies with strong control by the Hanwha Group's head family, including Vice Chairman Kim Dong-kwan, for 1.3 trillion won. This led shareholders to suspect, "Isn't this mobilizing funds for succession?"

Hanwha tried to appease shareholders. They fervently explained, "The acquisition of Hanwha Ocean shares and the paid-in capital increase are decisions to secure future growth engines unrelated to management succession." It was to no avail. Even when Vice Chairman Kim, the subject of the controversy, personally purchased stocks worth 3 billion won on the market and announced that Hanwha Corporation would participate in Hanwha Aerospace's paid-in capital increase, the perception of 'succession' did not disappear.

The one who put an end to the controversy was Chairman Kim Seung-yeon. He gifted half of his 22.65% stake in Hanwha Corporation, 11.32%, to his three sons. After the gift, Vice Chairman Kim (when including his stake in Hanwha Energy, totaling 20.85%) became the largest shareholder of Hanwha Corporation. This eliminated the need for additional share purchases for future management succession. Once the succession controversy was dispelled, Hanwha Aerospace's stock price began to rise more than 3% immediately after the market opened on the 1st.

Now, the task falls to Hanwha Aerospace. It must secure competitiveness with investment funds exceeding 3 trillion won. Riding the wave of a defense industry boom, Hanwha Aerospace posted a record operating profit of about 1.7 trillion won last year. An additional operating profit in the 6 trillion won range is expected over the next two years. As previously explained, the company can now expand its portfolio into shipbuilding and marine businesses and invest the funds raised from the paid-in capital increase into the defense business.

At last month's shareholders' meeting, Hanwha Aerospace CEO Son Jae-il said, "Through the paid-in capital increase, we will maximize the company's value and prioritize protecting and enhancing the future value of all shareholders, including minority shareholders." As CEO Son said, it is now time to prove this with performance. The burden on Hanwha Aerospace's shoulders has grown heavier as it must deliver results.