Trustone Asset Management, the second-largest shareholder of Taekwang Industrial, has come out in opposition to the company's corporate value enhancement measures. The firm is demanding a written response within 30 days and says it will consider steps up to convening an extraordinary shareholders' meeting and taking legal action depending on the outcome.
Trustone said on the 14th that it had sent an official open shareholder letter to Taekwang Industrial's management and independent board, demanding a full review of the "2026 Corporate Value Enhancement Plan."
The core of the letter is to verify whether the independent board, which should check the controlling shareholder and management, is fulfilling its role. Trustone publicly asked management to demonstrate in writing whether the independent board had expressed any disagreement with management's draft during the process of establishing the value-up plan disclosed on the 30th of last month, and whether there had been in-depth discussion of the "debt-free management principle" from a financial leverage perspective.
Trustone directly rebutted the company's diagnosis of the causes of its undervaluation, demanding that the payout ratio be raised starting from 10% this year to 40%, the KOSPI average, by 2030. Taekwang Industrial's (003240.KS) return on equity (ROE) stands at 2.1%, exceeding the industry average of 1.8%, and even in 2021, when profitability peaked, its price-to-book ratio (PBR) did not surpass 0.5 times. The essence of the undervaluation, the firm argued, is not industry conditions but the absence of a shareholder policy that has frozen dividends for 32 years. It also pointed to a double standard, noting that the 10-year average payout ratio of Taekwang Group's three listed companies was just 1.3%, while unlisted affiliates owned by the controlling shareholder's family reached 33%.
The firm also raised liquidity issues. As Taekwang Industrial's actual free float is about 230,000 shares, roughly 1% of the KOSPI average, and its daily average turnover ratio remains below 0.2%, Trustone urged the immediate implementation of a stock split of 5-to-1 or higher, or a bonus issue.
On the plan to use treasury stock (24.4%) as a resource for mergers and acquisitions (M&A), Trustone dismissed it as a pretext to avoid shareholder returns. Its logic is that using treasury stock at a PBR of 0.22 times is equivalent to issuing new shares at a price far below intrinsic value.
"We will decide the level of our follow-up response after watching the content of the reply from management and the independent board," a Trustone official said. "If the problem is not resolved, we will review all possible options, including convening an extraordinary shareholders' meeting, and will not rule out a legal review of whether directors are fulfilling their duty of loyalty."
