Truston Asset Management, the second-largest shareholder in Taekwang Industrial, sent public shareholder letters on July 14 to the company's management and independent board of directors, demanding a complete review of the value-up plan announced last month. Truston characterized Taekwang's plan as a 'deficient report' and warned that failure to comply could trigger an extraordinary general meeting and legal action. The move marks an escalation in Truston's shareholder activism campaign, targeting what it describes as 32 years of frozen dividends and structural undervaluation at a company trading at 0.22 times book value.
Truston Demands 5-to-1 Stock Split and 40% Dividend Payout by 2030
Truston required both management and the independent board to provide written public responses within 30 days. The asset manager called on the independent board to prove it fulfilled its promised 'oversight and monitoring role' rather than acting as a 'rubber stamp' for management proposals. Truston demanded disclosure of whether the board challenged management's initial draft of the value-up plan and whether it conducted in-depth discussions on appropriate financial leverage versus the company's 'debt-free management principle.'
The shareholder letter disputed Taekwang's attribution of undervaluation to industry conditions and profitability. Truston noted that Taekwang Industrial's ROE of 2.1% exceeds the industry average of 1.8%, and argued that the core issue is 'absence of shareholder policy' after 32 years of frozen dividends. According to the letter, Taekwang Group's three listed companies maintained a 10-year average dividend payout ratio of 1.3%, while unlisted affiliates owned by the controlling family paid out 33%—a tenfold difference. Truston demanded a concrete plan to raise the dividend payout ratio from 10% in the current year to 40% by 2030, matching the KOSPI average.
On liquidity, Truston highlighted that Taekwang Industrial's actual free float stands at approximately 230,000 shares—1% of the KOSPI average—with daily turnover below 0.2%, one-fifth of the KOSPI average of 1.15%. The asset manager called the company's position that 'liquidity shortage is unrelated to intrinsic value' a denial of the stock market's purpose, and demanded immediate implementation of a 5-to-1 stock split or stock dividend.
Truston Criticizes Treasury Stock Use for M&A as Shareholder Value Destruction
Truston rejected Taekwang Industrial's plan to reserve its 24.4% treasury stock for M&A purposes, labeling it an 'excuse to avoid shareholder returns.' The shareholder argued that deploying treasury stock at a PBR of 0.22 times is equivalent to issuing new shares at a price far below intrinsic value.
The letter cited recent real estate investments totaling 301.2 billion won over the past 2 years: purchase of Dosan Park Building (20 billion won), Heungkuk Life headquarters (51.2 billion won), Courtyard Marriott Namdaemun (50 billion won), and loans to a real estate development company owned by the controlling family's children (180 billion won). Truston stated: 'Spending cash reserves recklessly on real estate while using 250 billion won worth of treasury stock as a pretext to dilute shareholder equity is self-contradictory and destroys existing shareholder value.'
Truston Warns of Extraordinary General Meeting and Legal Review
A Truston representative stated that the asset manager will determine the level of follow-up action based on the responses from management and the independent board. The representative added: 'If the issues remain unresolved, we will consider all available options including convening an extraordinary general meeting, and we do not rule out legal review of whether directors have fulfilled their fiduciary duty under Article 382-3 of the Commercial Act.'
FAQ
What did Truston Asset Management demand from Taekwang Industrial on July 14?
Truston sent public shareholder letters demanding a complete review of Taekwang Industrial's value-up plan announced last month. The asset manager required written public responses within 30 days from both management and the independent board, and warned of potential extraordinary general meeting and legal action if demands are not met.
Why does Truston criticize Taekwang Industrial's dividend policy?
Truston argues that Taekwang Group's three listed companies maintained a 10-year average dividend payout ratio of 1.3%, while unlisted affiliates owned by the controlling family paid out 33%—a tenfold difference. The asset manager demanded a concrete plan to raise the dividend payout ratio from 10% in the current year to 40% by 2030.
What specific actions does Truston demand regarding Taekwang Industrial's stock liquidity?
Truston demanded immediate implementation of a 5-to-1 stock split or stock dividend, citing that Taekwang Industrial's actual free float stands at approximately 230,000 shares with daily turnover below 0.2%, one-fifth of the KOSPI average of 1.15%.
