Theborn Korea, led by CEO Baek Jong-won, has seen its stock price decline, with 99% of shareholders reporting losses. As the company heavily relies on CEO Baek, public sentiment has worsened amid recent controversies, including the 'Baekham' debacle, increasing concerns among shareholders.
According to NH Investment & Securities on the 30th, among 18,115 investors holding shares of Theborn Korea through this securities firm, the loss ratio stands at 99.99%. Their average return is minus (–) 25.66%, with an average purchase price of 38,407 won. Kiwoom Securities also estimates the average purchase price for individual investors of Theborn Korea at 49,700 won.
Theborn Korea has been on a downward trend since its listing in November last year. In contrast to its strong demand forecast among institutional investors, which set the initial public offering price at 34,000 won, the stock price peaked at 64,500 won on the listing day but was traded at 33,150 won on the 24th, 8.67% lower than the initial public offering price.
Amid this, public sentiment towards CEO Baek has worsened. Recently, CEO Baek introduced a canned ham called 'Baekham' as part of a Lunar New Year gift set, but its price was deemed excessively high compared to consumer expectations. Theborn Korea announced that it would sell a set of Baekham, originally priced at 51,900 won, at a discount of approximately 45%, bringing the price down to 28,500 won.
The controversy escalated when a consumer began comparing it to Spam, which holds the top market share in canned ham. Critics pointed out that despite the higher price, the pork content in Baekham is actually lower. For the same capacity, Spam is sold at a low price of 21,750 won on Coupang. The pork contents are 92.37% for Spam and 85.42% for Baekham. However, Baekham uses only domestic pork, while Spam combines domestic, U.S., Spanish, and Canadian pork.
Ultimately, CEO Baek appeared directly on YouTube to clarify the situation on the 26th. He stated, 'A profit margin of 1,500 won per set occurs during the 45% discount sale, but when including the company's operating costs, the profit margin is virtually zero.' He added, 'The difference in meat content based on 200 grams (7%) is about 14 grams, and the cost of 14 grams of meat is less than 100 won. Would I reduce the meat content just to save 100 won?'
Despite CEO Baek's explanation, public sentiment continues to deteriorate. As of the 30th, the Baekham video has received 3,600 comments, with remarks like, 'They treat subscribers like fools,' 'They sell stocks at a 50% discount, and now they're discounting ham,' and 'How about a 99% discount for 2 million won?' Criticism also appeared in the explanation video: 'Consumers criticize the selling price being treated as a discounted price, but it obscures the essence.'
Following the Baekham video, a video inspecting Hong Kong Ban Jeom garnered over 23,000 comments, but the reaction was not favorable. In the video, CEO Baek visits franchise stores to check the food quality. He reprimands and educates poorly performing franchise owners. Viewers expressed doubts about Theborn Korea's management capabilities alongside their criticism of the franchise owners. Comments included, 'All those managing Hong Kong Ban Jeom seem to be problematic' and 'There is no change even if issues are pointed out.' The revenue share of Hong Kong Ban Jeom stands at 12.72%, making it the second highest after Baekdabang at 37.34%.
The decline in fan sentiment is a concern for Theborn Korea's shareholders. CEO Baek's high recognition is both an attractive investment factor and a risk element. Theborn Korea noted in its investment prospectus at the time of listing, 'It cannot completely rule out the possibility of reputational decline due to CEO Baek's individual deviations, which could lead to decreased consumer demand and negatively impact the company's management performance and financial status.'
In fact, some evaluations suggest that CEO Baek's 'personal skills' were helpful during the listing process. After a conflict with a franchise owner of 'Yeondon Volcatts' that emerged in June 2023 posed a crisis on the path to listing, leveraging the popularity of the cooking variety show 'Black and White Chef' allowed for a successful turnaround in public sentiment. Theborn Korea's demand forecast for institutional investors was also successful, leading to a smooth listing.
Of course, the associated risk factors have yet to be resolved, as a judgment from the Fair Trade Commission is still pending. Some franchise owners of Yeondon Volcatts have reported to the Fair Trade Commission, stating, 'The headquarters recruited franchisees by promising false and exaggerated sales figures and revenue rates but are not providing any measures to address this,' while Theborn Korea contends that it has distributed expected revenue estimates to the franchise owners.