A group of minority shareholders of Hanwha Corp. holds a rally in front of Hanwha Group Chairman Kim Seung-youn's house in Seoul, June 4. Courtesy of Korea Stockholders Alliance

By Park Jae-hyuk

Protests have been continuing since last month in front of Hanwha Group Chairman Kim Seung-youn's house in Gahoe-dong, central Seoul, run by a group of minority shareholders of Hanwha Corp., the conglomerate's de facto holding firm, according to the Korea Stockholders Alliance, Thursday.

The alliance, which consists of retail investors here, has collaborated with Hanwha Corp.'s minority shareholders, who claim that Kim has been restraining the company's stock price intentionally to keep it low so he can avoid higher taxes when he hands over control of the group to his three sons.

Hanwha Group Chairman Kim Seung-youn / Courtesy of Hanwha Group

For the past few years, Hanwha Corp.'s market cap has stood at around 2 trillion won ($1.6 billion). Its stock price has not bounced back from the 30,000 won-level, after falling from the peak of 52,900 won in August 2017.

Citing that Hanwha Corp. posted a sales record of 52.8 trillion won last year, as well as a record operating profit of 2.9 trillion won, its minority shareholders claim that the company has been underestimated in comparison to holding firms of other "chaebol" groups.

They plan to hold another rally on June 18, following the previous ones held on May 14, 15, 28 and June 4.

"We will not stop our protest until the company comes up with plans to enhance its shareholder value," Korea Stockholders Alliance leader Jung Eui-jung said.

He is also considering sending letters to the governments of foreign countries, where Hanwha Group is doing business.

"We will take the action, if the company remains silent, even after our rally on June 18," he said.

Jung also urged the Yoon Suk-yeol administration to reduce inheritance and gift taxes, in order to prevent chaebol owners from lowering the stock prices of their companies before family successions.

This is not the first time for Hanwha Corp. to face concerns about its stock price.

Yuanta Securities analyst Choi Nam-kon said in his report in April 2021 that Hanwha Corp.'s stock price had been discounted, due to fears among investors that the company had been curbing its potential intentionally to prepare for a family succession.

"If a chaebol group is at the brink of a family succession, it is usually tempted to lower the stock price of its key affiliate," said Kim Woo-chan, a professor at Korea University Business School.

Another domestic securities analyst, who requested anonymity, admitted that Hanwha Corp.'s stock price has been underestimated for a long time.

However, he added that it is difficult to simply attribute its lower stock price to the succession issue.

"Because of the previous hikes in stock prices of companies that resolved their governance issues, minority shareholders may make such claims," the analyst said. "However, there can be other reasons behind Hanwha Corp.'s lower stock price, such as the businesses it manages."

Hanwha Corp. said it will listen to its minority shareholders and keep making efforts to enhance its shareholder value.

"The stock prices of other Korean holding companies have also remained low because their key subsidiaries are listed on the stock market," its official said. "We will make efforts to enhance our shareholder value by improving the competitiveness of our machinery and global businesses, as well as our fully owned subsidiary, Hanwha E&C."