Despite 90% of Young Poong’s net assets consisting of high-quality assets such as its stake in Korea Zinc and buildings in central Seoul, it is effectively trading at the lowest valuation in the Korean stock market, according to Must Asset.“This unusually poor valuation is believed to stem from the capital market’s deep disappointment in Young Poong’s corporate governance and shareholder policies,” it said.
In the event that the put option is exercised, resulting in a cash inflow equivalent to two to three times the current market cap, Must Asset said it would ask Young Poong to disclose a clear plan for utilizing the cash.“We strongly suggest that at least 30% of the incoming cash be allocated toward shareholder returns such as cash dividends or share buybacks,” it said.“Announcing such a plan would position Young Poong as a leading example of value-up practices in the Korean capital market.”YOUNG POONG’S RESPONSEMust Asset demanded Young Poong provide a sincere response to its proposal by Nov.29.
This is not in the best interest of shareholders.” Must Asset said Young Poong has retained 6.62% of its shares as treasury stock for over a decade without retiring them.“It is a contradictory situation … shedding light on why Young Poong is trading at the lowest valuation relative to its liquidation value in Korea,” the asset manager said in the proposal.
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