Kyungnam Pharm, famed for "Lemona," said it is moving into the liquor business. The 69-year-old company has gone through twists and turns as its owner changed several times. Most recently, after presenting a blueprint for an alcohol business unrelated to its core operations, it announced plans to raise roughly 19 billion won, drawing industry attention. What is happening at Kyungnam Pharm?
◇ After unveiling a new liquor business plan, 19 billion won paid-in capital increase in 10 days
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 as business purposes. Amending the articles is seen as a gateway to obtaining a liquor import and export license. Under current law, to obtain the license, liquor import and export must be included in the articles.
The company announced this on the 11th. It has not decided which types of alcohol, such as traditional liquor, 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 decided on the type of liquor or target overseas markets."
Kyungnam Pharm also plans to add "retail and wholesale, 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.
Just 10 days after unveiling its new business plans, Kyungnam Pharm suddenly moved to raise a large amount of capital. On the 21st, it disclosed a paid-in capital increase totaling 19,085,000,000 won. The paid-in capital increase will proceed by allotting shares to existing shareholders first, with forfeited shares offered to the public. It will issue 11 million common shares, with the tentative issue price for new shares set at 1,735 won. The underwriter is SK Securities, with the record date for new share allotment on June 25 and the scheduled 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, among others."
◇ Kyungnam Pharm has changed hands multiple times… a complex governance structure
Kyungnam Pharm traces its roots to Kyungnam Pharmacy, which the late former Chairman Yang Jun-ho opened in 1950. He went on to establish Kyungnam Pharm in 1957, and the company made a name for itself with Lemona in the 1980s. In 2003, a year before Yang's passing, Kyungnam Pharm was sold to Green Cross SangA, a subsidiary of Green Cross, for around 20 billion won.
In 2007, Kyungnam Pharm was acquired by HS Biopharm, a placental 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, Kyungnam Pharm's equity is held by Humasis (9.67%) and Billions (17.92%). Billions is an entertainment company 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 links run from Stella PE's special purpose vehicle Stella Innovation Investment Company → MiraeING → KBIO LABS → INCON → Humasis → Billions → Kyungnam Pharm.
MiraeING was owned through Namsan Trading and other entities 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 medicine, and a sore throat treatment. Among investors, interpretations vary over Kyungnam Pharm entering 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 aimed at boosting the stock. In 2023, Chairman Namgung acquired Humasis, a maker of COVID-19 test kits. The following year, Humasis announced a lithium minerals business unrelated to its existing operations. It later halted exploration, citing overseas policy changes.
In the first quarter this year, Kyungnam Pharm posted consolidated sales of 16.1 billion won, up 23% from 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.