[BizHanKook] Bubang Group Chairman Lee Dong-gun (88) is set to purchase an additional 805,000 shares of Bubang. If the purchase proceeds as planned, Chairman Lee’s stake in Bubang will increase from the current 1.93% to 3.43%. This move follows Bubang’s decision earlier this year to retire all of its treasury shares and a series of stake increases by the owner family and management, with Chairman Lee now taking the initiative for a large-scale open-market purchase.
What stands out is the timing. Bubang’s stock price has recently been hovering around the 1,000-won mark. Effective July 1, 2024, the Financial Services Commission established new delisting criteria for so-called "penny stocks"—stocks priced below 1,000 won on the KOSPI and KOSDAQ markets. A stock is designated as an administrative issue if its closing price remains below 1,000 won for 30 consecutive trading days. If the closing price rises above 1,000 won in the interim, the count for the 30-day period resets. If a stock fails to maintain a price of 1,000 won or higher for 45 out of the 90 trading days following its designation as an administrative issue, it becomes subject to final delisting.
Bubang finished trading below 1,000 won for 12 consecutive trading days from October 23 to November 9. While the closing price reached 1,002 won on November 10, it has been trading below 1,000 won again since November 11. Bubang stated that Chairman Lee Dong-gun’s purpose for the stock purchase is to strengthen responsible management and enhance shareholder value. The company did not explicitly link this purchase to the delisting criteria.
However, the market is paying close attention, as the company’s treasury share retirement and ongoing stock purchases by management and special related parties are occurring while the stock price remains near the new 1,000-won delisting threshold.
805,000 shares to be purchased in December… Stake increases from 1.93% to 3.43%
According to the Financial Supervisory Service's Data Analysis, Retrieval and Transfer System (DART), Chairman Lee Dong-gun submitted a trade plan on November 10 to purchase 805,000 common shares of Bubang in the open market. The planned purchase period is from December 10 to December 21. The planned price per share stated in the filing is 968 won, bringing the total expected transaction amount to 779.24 million won. The volume to be purchased represents approximately 1.50% of Bubang’s current issued shares. The final transaction amount and acquisition volume may differ depending on actual market prices and conditions.
Currently, Chairman Lee Dong-gun holds 1,033,952 common shares of Bubang, representing a 1.93% stake. If he completes the planned purchase of 805,000 shares, his holdings will rise to 1,838,952 shares, bringing his stake to 3.43%. Bubang explained that this stock purchase is a decision to reinforce responsible management and enhance mid-to-long-term corporate and shareholder value.
Chairman Lee is not the only one buying shares. Park Jae-soon, Vice Chairman and CEO of Bubang (66), has also been buying shares in the open market during the second half of this year. Vice Chairman Park’s holdings have increased by 60,000 shares, from 74,927 shares at the end of June to the current 134,927 shares, representing a 0.25% stake. The stake increase by Lee Dae-hee (55), Chairman Lee's eldest son and former Vice Chairman of Bubang, is even larger. According to a recent report on major shareholdings, Lee acquired an additional 435,716 shares through 27 open-market purchases between August 10 and November 5. His holdings grew from the previous 305,000 shares to 740,716 shares.
Changes in Bubang's shareholding structure are also tied to the large-scale retirement of treasury shares conducted this year. In August and September, Bubang retired its entire treasury stock holding of 6,385,779 shares in two installments. This volume is equivalent to 10.63% of the 60,052,260 shares issued before the retirement. As a result, the number of outstanding shares decreased to 53,666,481. Because treasury share retirement reduces the total number of issued shares without changing the number of shares held by existing shareholders, it has the effect of increasing stake percentages.
Indeed, while the 21,329,146 shares held by Bubang's largest shareholder, Techcross Holdings, remained unchanged, its stake increased from 35.52% before the retirement to the current 39.74%. The stakes held by the largest shareholder and special related parties, including Techcross Holdings, have also increased. According to a major shareholding report submitted on November 9, the total number of Bubang shares held by Techcross Holdings and its special related parties is 29,295,770, representing a 54.59% stake—an increase of 465,216 shares from the previous report.
Assuming Chairman Lee Dong-gun purchases the additional 805,000 shares as planned and there are no other changes in the stakes of special related parties, the total holdings of the largest shareholder group will increase to 30,100,770 shares. Based on the current number of outstanding shares, this results in a stake of approximately 56.09%. Bubang’s largest shareholder is Techcross Holdings, where Lee Joong-hee (52), Chairman Lee Dong-gun’s second son, is the largest shareholder with a 37.83% stake.
However, Bubang lists Chairman Lee Dong-gun as the "de facto controlling shareholder" in this trade plan report. Therefore, it is difficult to conclude that Chairman Lee’s personal stake increase is directly linked to changes in the group’s governance structure or succession. Nevertheless, with the retirement of all treasury shares followed by open-market purchases by the owner family and management, the largest shareholder's direct control over Bubang appears to be further strengthening.
Revenue and operating profit declined last year; operating loss in Q2 this year
Amidst the consecutive stake increases by the owner family and management, the most notable factor is Bubang’s stock price. The measures Bubang has taken this year under the banner of enhancing shareholder value are significant. It retired its entire treasury stock, which accounted for more than 10% of issued shares, and management including Vice Chairman Park Jae-soon and special related parties have been purchasing shares in the open market. On top of this, Chairman Lee Dong-gun has stepped forward to acquire an additional 1.5% of issued shares at once.
However, financial performance is cited as a key variable for stock price recovery. Bubang counts the kitchen appliance manufacturer Cuchen, Bubang Distribution, and BiznTech among its subsidiaries. Bubang’s consolidated revenue last year was 319.5 billion won, down from 336.5 billion won the previous year, and operating profit also fell from 4.9 billion won to 1.8 billion won during the same period. In the second quarter of this year, the company recorded an operating loss of approximately 600 million won. Ultimately, assessments suggest that whether Chairman Lee Dong-gun’s stake expansion will have a long-term impact on the stock price depends on the improvement of the core business performance.