Not even 100 million won, but 80 billion won to flex?
Lion Chemtech, Korea’s No. 1 synthetic wax (No. 4 in the world) and No. 3 artificial marble (No. 4 in the world), announced on the 2nd of this month that it will batch burn 4.99% (942,596) of its treasury shares through a public announcement after the market close. Based on the closing price of the day, the amount is worth 8.1 billion won. On the news, the stock price rose 4.77% in the after-hours single price. The treasury stock burning will take place on May 12.
Lion Chemtech is located at 36, Daedeok-daero 1277beon-gil (Munpyeong-dong), Daedeok-gu, Daejeon, Korea. An employee inspects artificial marble for export at Factory 1. Daejeon=Yoon Hyun-joo Reporter
Chairman Park Hee-won “A small reward for shareholders who waited for 10 years”
In an interview with The Korea Economic Daily on March 26 at the company’s headquarters in Daejeon, 75-year-old Chairman Park Hee-won said, “We will consider burning treasury shares in batches and issuing free shares for shareholders,” a promise that was soon fulfilled.
Lion Chemtech’s 2-day stock price was 8590 won. It rose 20.14% in four trading days after the exclusive interview with the Korea Economic Daily. “The treasury stock was previously purchased for about 10 billion won, so it’s actually a loss of 10 billion won, but it’s a small reward for shareholders who have trusted and waited for 10 years,” said Park Hee-won, chairman of Lion Chemtech, in a call with reporters. Lion Chemtech listed on the KOSDAQ market in November 2013. “We have always felt sorry for our shareholders,” Park said, emphasizing that the company is considering various cards to increase the number of shares in circulation, including a free capital increase.
Lion Chemtech Chairman Park Hee-won is interviewed by The Korea Economic Daily on March 26. Daejeon=Yoon Hyun-joo Reporter
The company also plans to strengthen its competitiveness in the main business. “Out of last year’s sales of 152 billion won, overseas sales accounted for 68 percent, or about 100 billion won,” Park said, emphasizing that the company is looking to develop new products related to artificial marble. Artificial marble has a high barrier to entry for small and medium-sized enterprises, and the company invests 5% of its sales in R&D every year to ensure product competitiveness. Demand is especially high in Russia, Europe, the United States, and Southeast Asia, and reconstruction demand is expected after the end of the Russian-Ukrainian war. “Local companies are setting up companies in Poland to take their products to Russia,” Park said. The company is also considering entering Vietnam, which has a growing middle class.
The materials industry also has a number of unique products. “We have a lot of orders from developed countries like Japan and Germany,” Park said, adding that he expects the company to grow faster when demand explodes. To this end, he added, “We are making every effort to automate and prepare facilities.”
A Lion Chemtech employee uses a forklift to move artificial marble to be exported overseas. Daejeon=Yoon Hyun-joo Reporter
“Considering establishing a Seoul office and investment company within the year… Aggressive sales”
The company also plans to revise its marketing strategy. Although the company is dealing with large construction companies, it is considering establishing an office in Seoul and an investment company within the year to expand sales. “As an engineer for 50 years, I’ve only worked in manufacturing, but I’m determined to trust young employees and make aggressive sales,” Park said. “We need to take a long view of the technology battle,” he said, “analyze companies across the country, and strengthen what’s lacking.”
Collaborations with other companies are also in the works. “I’m not a stubborn person. I am always open-minded,” he said. “We will find small and medium-sized enterprises with technology and find a way to synergize our business.” “I am also open to selling if there is an acquirer who can pay the right price,” he said. However, he added, “We will stay away from unscrupulous acquirers or those who want to take advantage of capitalless forces토토사이트.”
Synthetic wax sold by Lion Chemtech. Synthetic wax is a substance that is an additive to all substances, just like licorice in Chinese medicine. Daejeon=Yoon Hyun-joo Reporter
The company still plans to pursue mergers and acquisitions (M&A) of unlisted companies in the chemical and secondary battery industries with similar business lines. Lion Chemtech is currently developing plastic composite materials for electric vehicle batteries with 4.2 billion won in research support from the government. In fact, we have been in contact with several companies, but the principle is to avoid unreasonable acquisitions. This is because he was born as the second son of seven children in a poor family and suffered a lot in his youth, so he made a firm decision to ‘never be poor again’.
Inside Lion Chemtech Factory 2, a 10-minute drive from Lion Chemtech Factory 1. It mainly makes synthetic wax. Daejeon=Yoon Hyun-joo Reporter
Lion Chemtech’s financial position is also good, making it a well-known company in Daejeon. As of the end of last year, it had 25 billion won in cash, and its debt-to-equity ratio was in the 20s. The value of its real estate is estimated by the market at 100 billion won. This includes the Daejeon headquarters and 10,000 pyeong of factory 1, 4500 pyeong of factory 2 in Pyeongchon-dong, Daejeon, 3000 pyeong of factory 3 in Ochang, and 12,000 pyeong of factory site in Sejong. The company has been operating in the black for 15 years, from 2008 to last year. It pays a final dividend of 200 won per share every year. The market dividend rate was 2.80% at the end of last year, which is 0.5 percentage points higher than the average of 2.3% for listed companies in 2021.
Graph of Lion Chemtech’s stock price.
Meanwhile, Park has two sons and one daughter, but they have no interest in management, so his brother-in-law Park Sang-won is the only family member in the company. “There are about 240 employees at Lion Chemtech,” Park said, “and I am thinking every day about how to develop the company in the long term with a sense of responsibility.”