*This content was translated by AI.
Youngpoong, who is in a management dispute with Korea Zinc, is drawing attention as it has been designated as a "low (低) PBR company." With the government stepping up pressure on low-PBR companies to improve, Youngpoong's controversy over corporate value and shareholder return policies has grown even more, raising concerns.
According to securities firms, Youngpoong's stock price net asset ratio (PBR) remains remarkably low. NH Investment & Securities valued Youngpoong's PBR at 0.22, and the Korea Exchange was only 0.28 as of March 31. Usually, a PBR of less than 1 is interpreted to mean that the enterprise value is valued lower than the book value in the market. At a time when the government has pointed out low-PBR companies as targets for improvement, there is also a possibility that Youngpoong will be branded as "inferiority."
In particular, the fact that the current government directly pointed out the low PBR corporate problem is also a burden. President Lee Jae-myung pointed out the problems of low PBR companies, saying, "It is abnormal to buy and liquidate stocks with a stock price net asset ratio (PBR) of only 0.3 to 0.4," adding, "If there is a mixture of rotten and proper items, the store does not want to go."
Analysts inside and outside the industry say that structural risks overlap with the background of Youngpoong's undervaluation. The Yeongpung Seokpo Smelter is blamed for the Nakdonggang River water pollution and soil pollution problems, and environmental controversy continues. In fact, he was suspended for 58 days due to unauthorized discharge of wastewater, and there is also a risk of additional suspension, such as not implementing the pollution soil purification order. Analysts say that the repeated sanctions for violating environmental laws are acting as a burden on corporate value.
Youngpoong reportedly received 41 sanctions from authorities from 2020 to 2025 only for violating environmental laws. In addition, Youngpoong reportedly received a fine of 270 million won from the Ministry of Climate, Energy and Environment for not carrying out the disposal of all smelting residues within the deadline, which is a condition that must be implemented to continue its business (integrated environmental permit condition).
The company's performance is also sluggish. Youngpoong recently recorded a deficit for five consecutive years on a separate basis. In the case of last year, separate annual operating losses expanded to 277.7 billion won, putting it in crisis. Analysts say that the company has limited capacity to improve shareholder value due to environmental risks and sluggish performance.
This situation was also controversial in the shareholder return policy. Youngpoong recently decided on a cash dividend of 5 won per share, which has led to widespread complaints from shareholders, mainly in stock discussion rooms. In fact, investors strongly protested, pouring out reactions such as "shareholder farming," "a company that treats shareholders as beggars," and "Is the dividend for real?"
In response, Youngpoong immediately gave an explanation. Youngpoong explained, "Including stock dividends, there is a dividend effect of about 1,685 won per share," adding, "The total amount of dividends combined with stocks and cash is about 3%. "There are many assets such as Korea Zinc shares and buildings including Yeongpoong headquarters in Gangnam, Seoul, and PBR is high," he said. "We are trying to increase shareholder value by distributing shares and splitting face value even in the face of a deficit."
Nevertheless, the market criticized Youngpoong as a "double standard" for emphasizing "improving governance" and "raising shareholder value" in the process of dispute over management rights in Korea Zinc. It is pointed out that the company is demanding active shareholder returns from its counterparts at a time when controversy over low PBR, deficits, and dividends is being raised at the same time.
The market believes that these factors worked in combination and influenced shareholder judgment. In an analysis of the bill at Korea Zinc's regular shareholders' meeting, Sustin Best, a domestic voting advisory firm, said, "Youngpoong is difficult to say that it has secured enough market trust in recent years in terms of environmental and safety risk management, and MBK Partners has a market boundary in that it has a relatively short-term financial investor character rather than a long-term industry operation as a private equity fund."
It is analyzed that it had a significant impact on the actual vote. At the last Korea Zinc shareholders' meeting, Korea Zinc's key agenda, the "Proposal for the Appointment of Five Directors," was approved with 62.98% of the vote. MBK and Youngpoong's "Six Directors Appointment Plan" received 52.21%. The gap between the two agendas is about 10.8 percentage points. Considering Korea Zinc's minority shareholder stake, which is estimated to be around 15% as of the end of last year, and the gap between Hyun Kyung-jin and MBK and Youngpoong, most of the minority shareholders fully supported the company's agenda.
The same goes for the results of the appointment of directors. Considering the gap in equity between the two sides and the withdrawal of the National Pension Service, it is analyzed that Chairman Choi Yoon-beom and Chairman Hwang Deok-nam were re-elected as directors in the second and third place because there were virtually all votes from foreigners, institutions and small shareholders.
An industry official said, "Korea Zinc shareholders seem to have evaluated who has long-term industrial operation capabilities and willingness to enhance shareholder value beyond simple management disputes," adding, "Youngpoong is believed to be in urgent need of responding to environmental risks that are continuously undermining corporate competitiveness, as well as low PBR, which the current government has taken issue with, rather than focusing on the prolonged management dispute."
Meanwhile, MBK Partners and Youngpoong's injunction against Korea Zinc was rejected by the Supreme Court, asking for "permission to exercise voting rights at the general shareholders' meeting."
On the 2nd, the Supreme Court (Chief Justice Shin Sook-hee) rejected a re-appeal against the MBK and Youngpoong Coalition's decision to dismiss the provisional disposition to allow voting rights to be exercised against Korea Zinc.
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*This content was translated by AI.
