Young Poong Precision emerges as key to Korea Zinc control; shares surge

Buying an additional stake in Korea Zinc, key to control of Young Poong Group, would be costlier, analysts say

Korea Zinc is the world's largest lead and zinc smelter

Eui-Myung Park 1

Nov 27, 2022 (Gmt+09:00) uimyung@hankyung.com

Leadership & Management

Shares of Young Poong Precision Corp. are flying high as the company is emerging as the key to the control of Korea Zinc Co., which in turn is the core affiliate of Young Poong Group.

Young Poong Precision’s stock surged 20.1% to close at 15,850 won on Friday, far outperforming the broader benchmark Kospi index’s 0.1% fall.

Analysts attributed the sharp rise to a possible equity stake feud between the main stakeholders of Young Poong Group, a conglomerate engaged in the mining, electronics and book-selling industries.

Since its launch in 1949, the conglomerate’s major affiliates have been largely run by two family groups – one by Chang Hyung-jin, chairman of Young Poong Corp., which controls electronics units; and the other by Choi Yun-birm, vice chairman and co-CEO of Korea Zinc., which mainly controls non-electronics subsidiaries.

Both sides are racing to raise their stake in Korea Zinc, Korea’s largest zinc smelter and the key affiliate of Young Poong Group.

Korea Zinc Vice Chairman & Co-CEO Choi Yun-birm

Currently, the Chang family owns a combined 31% stake in Korea Zinc, while the Choi family has a 15% stake in the smelter. The Choi family’s ownership of Korea Zinc rises to 28% when the stakes held by his friendly shareholders such as Hanwha Group and LG Chem Ltd. are included.

Industry watchers said the Chang family may want to increase their stake in Young Poong Precision, which in turn holds 1.49% of Korea Zinc because it’s cheaper to buy Young Poong Precision instead of directly purchasing Korean Zinc’s shares.

The Chang family, which currently owns 22.1% of Young Poong Precision, needs to buy an additional 8% stake in the precision company to cement its control of the maker of pumps and valves. The 8% would cost about 20 billion won ($15 million).

However, it would cost the Chang family some 200 billion won ($150 million) to directly purchase 1.49% of Korea Zinc to have a greater say in Young Poong Group.

Shares of Korea Zinc finished Friday up 6.5% at 657,000 won.

Since the possible equity stake dispute between the two families came up in August, shares of Young Poong Precision have risen 82%.

Write to Eui-Myung Park at uimyung@hankyung.com
In-Soo Nam edited this article.