Hanmi Pharmaceutical decided to pay cash dividends of 2,000 won per share. The total dividends amount to about 25.4 billion won, the largest since the company's founding. Backed by earnings growth, it strengthened its shareholder return policy, and with recent conflicts among major shareholders, the industry is offering varied interpretations.
◇ Dividends from subsidiaries to the holding company… Shin Dong-kuk's cash route
Hanmi Pharmaceutical will hold a regular shareholders meeting on the 31st to give final approval to a year-end settlement of account cash dividends of 2,000 won per common share. The total dividends aggregates about 25.37822 billion won, the largest ever. The company had maintained dividends of 500 won per share since 2020, then raised them to 1,000 won last year and doubled them again this year.
Holding company Hanmi Science decided to pay cash dividends of 300 won per common share. The total dividends aggregates about 20.3 billion won, the largest since 2016. With last year marking record results, the move is seen as an expansion of shareholder returns.
The biggest beneficiaries of the expanded dividends are Hanmi Science and the largest individual shareholder, Hanyang Precision Co. Chairman Shin Dong-kuk. Hanmi Science holds 41.42% equity in Hanmi Pharmaceutical, with dividend revenue estimated at about 10.5 billion won.
Chairman Shin is also expected to see a substantial cash inflow. Shin holds 7.72% equity in Hanmi Pharmaceutical, and Hanyang Precision Co. holds 0.95%. The pre-tax dividends Shin will receive are about 1.977 billion won, and Hanyang Precision Co. about 256 million won, putting the expected dividend revenue at a total of 2.23 billion won.
From Hanmi Science, Shin will receive about 3.375 billion won in dividends and Hanyang Precision Co. about 1.426 billion won, totaling about 4.8 billion won. This is calculated based on Shin's equity stakes at the end of last year: 16.43% in Hanmi Science and 6.95% in Hanyang Precision Co.
Hanmi Pharmaceutical paid 10.5 billion won in dividends to Hanmi Science, boosting the holding company's dividend capacity, which in turn translates into Shin securing cash in the 7 billion won range.
On the 12th, Shin signed an over-the-counter purchase agreement to increase his Hanmi Science equity. The counterparty is the side of the founder family's eldest son, Im Jong-yoon, Beijing Hanmi Pharmaceutical chairman of the board, and the acquisition price totals 213.7 billion won. Through this, Shin's equity will become 22.88%, up 6.45 percentage points from the end of last year.
According to the filing, the purchase of Shin's roughly 4.41 million shares will be carried out in two tranches. If Shin completes the transaction by the 31st, he can receive an additional about 1.3 billion won in dividends. In that case, the dividends Shin receives will amount to 8.35 billion won.
◇ Amid cracks in the four-party alliance, a "private equity-style exit" in the works?
Some say Hanmi Pharmaceutical's expanded dividends and personnel moves suggest Chairman Shin Dong-kuk's strategy to recoup his investment.
An investment banking (IB) industry official said, "There is an underlying 'private equity-style exit' strategy to raise dividend yields to defend against a share-price decline and boost operating profit to make the corporations more sale-ready."
The Hanmi Pharmaceutical Group saw a management control dispute between mother and daughter and the brothers over inheritance taxes after the death of founder and former Chairman Im Seong-gi in Aug. 2020. At the center was the "key man" who decided the outcome of the control battle: Shin. A junior from the hometown of the late Im Seong-gi, he helped resolve the founder family's inheritance tax issue and expanded equity—namely control—in Hanmi Science and Hanmi Pharmaceutical.
In the early phase of the control fight, Shin first sided with the brothers (Im Jong-yoon, Beijing Hanmi Pharmaceutical chairman of the board; Im Jong-hun, Hanmi Science inside director), then joined hands with the mother and daughter (Song Young-sook, Hanmi Science chair; Im Ju-hyeon, Hanmi Science vice chair) to sign a shareholders agreement, forming a four-party alliance.
But cracks have recently appeared in the alliance. The dispute continued after Shin issued exchangeable bonds (EB) using Hanmi Pharmaceutical equity as collateral last year. The mother-and-daughter side filed suit, arguing it was effectively no different from disposing of equity, and obtained provisional attachments on Shin's home and part of his equity. As internal rifts within the four-party alliance surfaced, Shin raised a borrowing fund amounting to a whopping 213.7 billion won to increase his equity. The four-party alliance's contract is said to expire in 2029.
An IB industry official said, "Shin will likely use the dividends as ammunition to service interest or respond to the ongoing dispute with the mother-and-daughter side," and added, "If he has the financial capacity, he could further increase his equity and later pursue an en bloc sale of equity, including Hanmi Pharmaceutical management control."
On the 12th, the Hanmi Science board decided to replace Hanmi Pharmaceutical's CEO instead of extending the term of professional manager CEO Park Jae-hyun. Hwang Sang-yeon, head of the private equity (PE) division at HB Investment, has been nominated as Hanmi Pharmaceutical's next CEO. Hwang, the nominee, is a finance and investment expert who has served as a securities firm research head and chief investment officer at a global asset manager. This is the first time an outsider will head Hanmi Pharmaceutical.
A domestic securities firm's pharmaceuticals and biotech research fellow, who requested anonymity, said, "I think Hanmi Pharmaceutical will tilt further toward a strengthened management strategy focused on short-term finance rather than long-term research and development (R&D) investment."