Taekwang Industrial(003240) The No. 2 shareholder, Truston Asset Management, sent an open shareholder letter to management and the independent board demanding a full reconsideration of the value-up plan. Expanded dividends and a stock split are the core. In particular, it demanded a public reply within 30 days and ratcheted up pressure by saying it would consider calling an extraordinary shareholders meeting and taking legal action depending on the response.
On the 14th, Truston Asset Management said it sent an open shareholder letter to Taekwang Industrial's management and independent board demanding a full reconsideration of the "2026 corporate value enhancement plan." This follows its criticism on the 1st calling Taekwang Industrial's value-up plan a "shoddy report."
Truston particularly took issue with the oversight function of the independent board. It publicly questioned the independent board on whether it had ever presented differing views to management's proposals in the process of establishing policies on dividends, stock split, and treasury shares, and whether it had discussed using an appropriate level of financial leverage regarding management's "no-debt management principle."
Truston said, "The independent board must not become a rubber stamp that simply approves management's proposals," and added, "We will publicly verify whether the checks and oversight role promised by the independent board in June actually worked."
It also pushed back against Taekwang Industrial's explanation that "low expectations for profitability and growth" were the reason for the undervaluation. Truston argued that Taekwang Industrial's return on equity (ROE) is 2.1%, higher than the industry average of 1.8%, and that even in 2021, when profitability was strongest (ROE 8.7%), the price-to-book ratio (PBR) failed to exceed 0.5 times.
Instead, it pointed to low dividends sustained over 32 years as the fundamental cause of the undervaluation. Truston noted that while the average payout ratio over the past 10 years for Taekwang Group-listed companies Taekwang Industrial, Daehan Synthetic Fiber, and Heungkuk Fire&Marine Insurance is just 1.3%, the average payout ratio for unlisted affiliates Heungkuk Life Insurance, Heungkuk Securities, Goryeo Savings Bank, and Heungkuk Asset Management is 33%, about 10 times higher.
Accordingly, it demanded a dividends policy roadmap that starts with a 10% payout ratio in 2026 and gradually raises it to 40%, the KOSPI average level, by 2030.
It also urged a stock split to improve liquidity. Truston said Taekwang Industrial's actual free float is only about 230,000 shares and its average daily turnover is one-fifth of the KOSPI average, arguing, "Liquidity must be improved through a stock split of 5-to-1 or higher or a bonus issue."
It also criticized the plan to use treasury shares for future mergers and acquisitions (M&A). Truston said, "In a situation where the share price is at a PBR of 0.22 times, using treasury shares for M&A is no different from issuing new shares at a price far below the corporations' intrinsic value," and added, "It raises suspicions that this is an attempt to deliberately suppress the share price under the pretext of M&A."
It also noted that over the past two years Taekwang Industrial spent a total of 301.2 billion won on the Dosan Park building, the Heungkuk Life Insurance headquarters, investments in the Courtyard Marriott Namdaemun Hotel, and lending to an affiliate-related real estate developer, arguing, "Spending hundreds of billions of won on real estate investments while citing a lack of funds to justify using treasury shares and the possibility of issuing new shares is contradictory."
Truston said, "After watching how the company has treated shareholders over the past eight years, we have fundamental doubts about whether the partnership relationship between shareholders and the company can be maintained," and added, "We will decide our response after reviewing the replies from management and the independent board."
It added, "If the issue is not resolved, we will consider all options available as shareholders, including calling an extraordinary shareholders meeting, and we will not rule out legal review of whether directors have fulfilled their duty of loyalty."