Who Will Take the Cash as KPX Holdings Dumps KPX Life Science Shares?

[Asia Economy Reporter Jang Hyowon] As KPX Life Science's stock price surged due to the 'COVID-19 vaccine theme,' its largest shareholder, KPX Holdings, quickly sold its shares on the market, realizing substantial profits. KPX Holdings is the holding company of the KPX Group, in which Chairman Yang Gyumo's family owns more than half of the shares. Market attention is focused on how KPX Holdings will use the cash it secured.

Secured 120 billion KRW in cash... Will dividends be issued?

According to the Financial Supervisory Service's electronic disclosure on the 1st, KPX Holdings sold 30.92% of its KPX Life Science shares over three trading days on the 11th, 13th, and 17th. The average selling price was 26,450 KRW per share, securing approximately 122.7 billion KRW. As a result, KPX Holdings' stake in KPX Life Science dropped to 21%.

Following the large-scale sale by the largest shareholder, KPX Life Science's stock price plunged. On the 13th, it rose as much as 23% intraday but closed down 15%, and on the 17th, it surged 11% intraday before closing down 8%. This is analyzed as the effect of KPX Holdings selling shares whenever the stock price rose due to the COVID-19 vaccine theme.

A KPX Holdings representative stated, "When shareholders inquire about KPX Life Science, we only mentioned that it is related to Pfizer and antibiotics, and the company has never said it is related to vaccines."

The cash secured this way is expected to be recorded as non-operating income on a separate basis for KPX Holdings. The book value of KPX Life Science shares held by KPX Holdings is about 4,000 KRW. Since they sold at around 26,000 KRW, a gain of approximately 104 billion KRW is expected to be reflected in net profit.

The market is speculating on the possibility of dividends from KPX Holdings. Since converting to a holding company in 2006, KPX Holdings has paid high dividends annually. The average cash dividend yield over the past three years is 4.9%. The dividend payout ratio was 30.9% last year, 288.6% in 2018, and 39.0% in 2017.

The reason for the fluctuating dividend payout ratio is that the company paid the same dividend of 2,600 KRW per share in both 2018 and last year. This means dividends were paid regardless of the company's net profit size. High dividends are also expected this year.

Is Vice Chairman Yang Junyoung the biggest beneficiary?

If KPX Holdings pays dividends, more than half will go to special related parties such as relatives of Chairman Yang Gyumo. Including special related parties, the Yang family holds 50.9% of KPX Holdings' shares. The single largest shareholder is Chairman Yang Gyumo, who owns 19.64%.

However, the actual largest shareholder is Vice Chairman Yang Junyoung, the eldest son of Chairman Yang Gyumo. Vice Chairman Yang holds 10.4% of KPX Holdings' shares directly and controls an additional 11.24% through 'CK Enterprise,' a corporation where he is the largest shareholder, giving him a total control of 21.64%.

CK Enterprise began acquiring KPX Holdings shares gradually starting with 7,659 shares in 2008. Its income sources include product exports, real estate rental income, and dividends.

The main revenue from product exports comes from internal transactions within the KPX Group. As of the end of last year, CK Enterprise recorded 6.1 billion KRW in sales from product exports. All of these sales were exports to the affiliate 'VINA FOAM.' The products exported were purchased from KPX Chemical at a purchase price of 5.1 billion KRW. CK Enterprise earns a profit of 1 billion KRW from the export process between KPX Chemical and VINA FOAM.

Another revenue source is real estate rental income. CK Enterprise acquired a property in Samnak-dong, Busan, from Jinyang Co., Ltd. in 1996 when Vice Chairman Yang Junyoung was 28 years old. Jinyang Co., Ltd. is an affiliate of KPX Holdings. CK Enterprise collects rent from this property annually, receiving 330 million KRW in rent last year. With this income, Vice Chairman Yang has been able to strengthen his control over the KPX Group.

A KPX Holdings representative said, "The reason for selling KPX Life Science shares was to improve the governance structure and secure funds for investment," adding, "Specific plans for the use of funds have not been decided."

This content was produced with the assistance of AI translation services.