Kyungnam Pharm, the vitamin house famed for "Lemona," said it will enter the liquor business. The 69-year-old company has gone through ups and downs as ownership changed hands several times. Most recently, it unveiled a blueprint for an alcohol business unrelated to its main line and then announced a plan to raise about 19 billion won, drawing industry attention. What is happening at Kyungnam Pharm?
◇ After unveiling a new liquor business plan, 10 days later… a 19 billion won paid-in capital increase
Kyungnam Pharm said it will hold a shareholders meeting on the 26th to add "liquor import and export business" and "liquor distribution and sales business" to its articles of incorporation. Amending the articles is seen as a gateway to obtaining a liquor import-export license. Under current law, a company must include the liquor import-export business in its articles to obtain a license.
The company announced this on the 11th. It has not decided which alcoholic beverages, such as traditional liquors, it will distribute. A Kyungnam Pharm official said, "We are reviewing new business opportunities," and noted, "We plan to proceed with licensing procedures in accordance with relevant laws, and we have not determined the type of liquor and the overseas target countries."
Kyungnam Pharm also plans to add "wholesale, retail, distribution, and manufacturing of pet supplies" to its business purposes. It said this is to produce and sell pet food. In the early stage, it will focus on pet food and supplies, then expand into healthcare.
Kyungnam Pharm moved to raise a large amount of capital just 10 days after unveiling its new business plans. On the 21st, it disclosed a paid-in capital increase worth 19.085 billion won. The paid-in capital increase will be conducted as a rights offering to existing shareholders, with any forfeited shares offered to the public. It will issue 11 million common shares at an expected issue price of 1,735 won per new share. The underwriter is SK Securities, with the record date for new share allocation on June 25 and the expected listing date for the new shares on Aug. 24. A company official said, "We plan to use the operating funds for product marketing and raw and subsidiary material expense."
◇ Kyungnam Pharm changed hands multiple times… a complex governance structure
Kyungnam Pharm traces its roots to Kyungnam Pharmacy, opened in 1950 by the late former Chairman Yang Jun-ho. He went on to found Kyungnam Pharm in 1957, and the company made its name in the 1980s with Lemona. In 2003, a year before Yang's death, Kyungnam Pharm was sold to Green Cross Sang-A, a subsidiary of Green Cross, for around 20 billion won.
In 2007, Kyungnam Pharm was acquired by HS Biopharm, a placenta health food company. After further twists and turns, in 2024 diagnostic company Humasis bought Kyungnam Pharm for 48 billion won. As of the first quarter this year, Humasis (9.67%) and Billions (17.92%) hold equity in Kyungnam Pharm. Billions is an entertainment agency with actors and singers. Humasis also holds a 33.92% stake in Billions.
At the top of the company's governance structure is Stella PE. The chain runs from the special purpose investment company Stella Innovation, established by Stella PE, to MiraeING → KBIO LABS → INCON → Humasis → Billions → Kyungnam Pharm.
MiraeING was owned through Namsan Trading and others by Chairman Namgung Gyeon, known as an M&A expert and corporate raider. In March this year, Stella PE bought 22.28% equity in MiraeING. Namgung's son, Namgung Jeong, still serves as an inside director at Kyungnam Pharm.
◇ Stock price halved over three years → eyes on liquor exports?
Kyungnam Pharm is known not only for Lemona, but also for collagen, tonics, athlete's foot remedies, and sore throat treatments. Among investors, interpretations vary over Kyungnam Pharm's move into a liquor business unrelated to pharmaceuticals.
Kyungnam Pharm's share price has fallen nearly 60% over the past three years. Some say the new business announcement is intended to boost the stock. In 2023, Chairman Namgung acquired Humasis, which manufactures COVID-19 diagnostic kits. The following year, Humasis announced a lithium mineral business unrelated to its existing operations. It later halted exploration, citing changes in overseas policy.
In the first quarter this year, Kyungnam Pharm posted consolidated sales of 16.1 billion won, up 23% from the same period a year earlier. Operating profit was 400 million won, up 257% year over year. Lemona sales were 4.5 billion won, accounting for 28% of total sales. The company supplies products to about 24,000 pharmacies, convenience stores, and big-box retailers nationwide.