Must Asset Mgmt Goes Activist on Young Poong

• Must Asset Management, a 3% shareholder of Young Poong (000670 KS), started to go activist on the company on 5 February.

• Based on current market cap, this would represent a P/B of 0.2x using the consolidated controlling interest equity of 3.9 trillion won!

• There is some speculation that Must Asset Mgmt may form an alliance with Chairman Choi’s family as it proposed to Young Poong to recommend outside directors.

Must Asset Management, a 3% shareholder of Young Poong (000670 KS), started to go activist on the company on 5 February.

Must Asset Mgmt submitted a shareholder proposal to the company urging the appointment of independent outside directors. Must Asset Mgmt is proposing three outside director candidates including ttorney Jeon Young-jun, Park Woong-han, head of Alsquare, and attorney Ji Heon-yeong.

In addition, Must Asset Mgmt mentioned that Young Poong needs to improve shareholder returns and improve minority shareholder rights. Basically, the Young Poong has a market cap of 777 billion won and its net assets are nearly 5 trillion won so the company is trading at such a big discount to its net assets.

Young Poong had total consolidated equity of 4.3 trillion won and consolidated controlling interest equity of 3.9 trillion won at the end of 3Q 2024. Based on current market cap, this would represent a P/B of 0.2x using the consolidated controlling interest equity of 3.9 trillion won.

Young Poong - Could Provide Much Higher Shareholder Returns

Although MBK has partnered with Young Poong to acquire the management control of Korea Zinc, one could argue that Young Poong itself could do much more to provide higher shareholder returns to its shareholders. Young Poong's dividend yield has averaged 1.7% in the past three years and it has not conducted any share buybacks/cancellations of its shares in the past several years. Most of Young Poong's NAV is centered on its 25.4% stake in Korea Zinc.

However, Young Poong has many other investments in other companies and real estate which it could monetize. So the argument is that if Young Poong is serious about improving shareholder returns and capital allocation at Korea Zinc, it should clean up its own act first and try to provide higher shareholder returns to the minority shareholders of Young Poong.