Interest from investors in Cleanetopia, the largest laundry market player in Korea, is increasing as it pushes for a sale. The market highlights a market share exceeding 70% and a steady increase in cash assets as key competitive advantages. However, there are also forecasts that the chasing of latecomers could change the market landscape.
According to the laundry industry on the 7th, global private equity funds and large investors are considering acquiring Cleanetopia. The private equity firm JKL Partners, which holds shares in Cleanetopia, has selected UBS and Samil as the sale's lead managers. UBS, Switzerland's largest financial institution, is expanding its influence in the domestic investment banking sector following its acquisition of Credit Suisse in 2023.
Founded in 1991, Cleanetopia holds more than 70% market share in Korea's laundry market, which is estimated to be worth 6 trillion won. Initially, it operated around laundry shops, but it launched a delivery service for laundry last year. It has secured personal customer services as well as major hospitals in Korea such as Severance Hospital and Seoul National University Hospital (SNUH) as clients, and it entered the hotel laundry market by acquiring a specialized hotel laundry service company, currently holding 16 hotels as clients.
In the market, financial soundness is also highlighted as a strength in addition to being 'the top player' in the industry. In fact, cash and cash-equivalents have shown a remarkable growth trend.
Cash equivalents, which were around 7.4 billion won in 2020, surpassed 11.5 billion won in 2022 and reached approximately 21.9 billion won by the end of last year.
On the other hand, accounts receivable and other receivables have decreased, leading to an assessment that the working capital structure has stabilized. Sales rose steadily, recording about 280 billion won last year, but accounts receivable decreased from about 11.3 billion won in 2023 to around 8.1 billion won last year. This indicates improved efficiency in working capital turnover and better cash flow.
Although the debt ratio increased slightly to about 62% last year, it still maintains a stable financial structure. It is generally judged that a debt ratio below 100% is not significantly risky. The debt ratio, which was about 80% in 2020, decreased to the range of 40-50% from 2021 to 2023.
However, there is a possibility that Cleanetopia may lose market share due to service enhancements by major competitors. The living essentials company, which operates the laundry service 'Lundrigo,' recorded sales of 13 billion won in 2021, and has steadily risen to about 54 billion won last year. Although it is in a deficit state for four consecutive years, including an operating loss of about 23 billion won last year, it continues to pursue growth through the establishment of smart factories and services aimed at corporations.
Washiswat, which operates the 'Laundry Special Forces' service, also reported sales of around 33 billion won in both 2023 and last year, with operating losses dropping to about 1.2 billion won, four times less than the 4.6 billion won in 2023. It has been evaluated for achieving cost efficiency based on strategies such as refining types of laundry services and building smart factories. Additionally, many latecomers such as Cheongse, Korea Laundry, and Daily New Clothes are emerging, intensifying competition.
The disappearance of 'goodwill' on the financial statements is also a point to note. Cleanetopia's goodwill was recorded at about 4.2 billion won in 2020, but it decreased to 2.8 billion won in 2021 and 1.3 billion won in 2022, and from 2023, this item has disappeared.
Cleanetopia explained that it applies a conservative accounting standard that allocates the value of intangible assets as expense over a certain period and reflects the loss early for assets with declining profitability.
However, some point out risks, suggesting that low expected revenues or actual performances from previously conducted businesses may have led to the disappearance of goodwill.
An industry official noted, 'In a business structure where brand recognition and customer retention rates are important, akin to business areas among corporations, there is room to examine market reaction and the durability of business models,' adding that 'while it is clear Cleanetopia is a highly sought-after asset, the decrease in goodwill and intense industry competition raises questions about whether it can maintain its current position.'