Samsung Publishing, The Pinkfong Company IPO Imminent: A Double-Edged Sword

Offline Businesses Struggle Due to Corona
Stock Prices Fluctuate Ahead of Affiliate Companies' IPOs

[Asia Economy Reporter Park So-yeon] Samsung Publishing operates primarily in the infant and children's publishing sector. Its product range is mainly sold through book sections in online and offline bookstores as well as social shopping platforms. The company holds a dominant position in the infant and children's single-book market. Major subsidiaries include Artbox, which manufactures and sells stationery, fashion design products, and office supplies to consumers; Smart & Media, engaged in animation production and distribution; and AB Logistics, a logistics management company. The largest shareholder is CEO Kim Jin-yong, holding a 45.44% stake. Related parties, including spouse Kim Mi-jae (3.71%), children Kim Min-seok (6.28%) and Kim Woo-seok (4.81%), uncle Kim Jong-gyu (3.28%), and nephew Kim Jin-wook (0.98%), collectively hold 64.49% of the shares.

◇Offline Stores Hit Hard by COVID-19= Samsung Publishing struggled during the COVID-19 pandemic. The profitable trend maintained until 2019 collapsed in 2020, resulting in a shift to losses. The impact of its affiliate Artbox was significant. Samsung Publishing's revenue is divided into four business segments: publishing, rest areas, leasing, and its affiliate Artbox’s stationery, fancy goods, and office supplies. Among these, Artbox, which operates about 90 directly managed stores nationwide, was severely affected by COVID-19, causing a sharp decline in profitability. This was due to social distancing measures that kept customers away from offline stores.

Looking at Samsung Publishing’s sales, revenue was maintained between 160 billion and 200 billion KRW from 2016 to 2020. Last year, cumulative sales reached 130.6 billion KRW through the third quarter. Operating profit showed a declining trend after recording 12.2 billion KRW in 2016, turning into an operating loss of 4.5 billion KRW in 2020. Last year, operating profit was 1.9 billion KRW through the third quarter. Interest-bearing debt increased from 42 billion KRW at the end of 2016 to 79.6 billion KRW at the end of 2020.

Recently, a reopening atmosphere following COVID-19 has been detected. My Little Tiger, a retailer of books, toys, and educational materials, is expanding its online sales channels, and sales of educational materials such as Samsung English are increasing again, especially around academies, indicating signs of recovery. Samsung Publishing plans to expand its customer base focusing on educational content in the future. Since the infant and children's publishing and content business is classified as an industry relatively insensitive to economic fluctuations, it is considered stable with the potential to steadily drive sales growth.

◇'The Pinkfong Company' IPO: A Double-Edged Sword for Samsung Publishing= Samsung Publishing is the second-largest shareholder of 'The Pinkfong Company,' which produces globally popular infant and toddler content such as 'Baby Shark,' holding a 16.83% stake. The largest shareholder of The Pinkfong Company is CEO Kim Min-seok, who holds an 18.5% stake and is the eldest son of Samsung Publishing CEO Kim Jin-yong.

After news broke that The Pinkfong Company, operated by the eldest son, was preparing for an IPO, Samsung Publishing’s stock price soared but has recently plunged. This year, it was even designated as a stock requiring investment caution by the Korea Exchange. In January, concentrated sell trades in a few branches and accounts caused the stock price to drop more than 75% within a week.

Some speculate that the imminent IPO of affiliate The Pinkfong Company triggered a shift in investor demand. While expectations for profits from The Pinkfong Company’s IPO as the second-largest shareholder have intensified, there is also anxiety about sell-offs following the listing. A Samsung Publishing official said, “The stock price has fluctuated repeatedly due to the Pinkfong issue, drawing constant attention, but there has been no significant change in our core business. Along with the COVID-19 reopening, we will continue steady operations in our core infant and children’s toy and publishing markets.”

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