Futurenet shares soar as Hyundai Home Shopping increases stake

Hyundai Home Shopping Co. logo [Courtesy of Hyundai Home Shopping]

Hyundai Home Shopping Co., a subsidiary of Hyundai Department Store Group, has been acquiring shares of its affiliate Hyundai Futurenet Co., resulting in a steady increase in the latter’s stock price.

Hyundai Futurenet shares gained 33.7 percent since the beginning of this year until April 20. Hyundai Home Shopping bought a 2.96 percent stake in Hyundai Futurenet between Feb. 8 and April 14, raising its stake to 41.3 percent. A Hyundai Home Shopping official explained that Hyundai Futurenet is undervalued and that they are buying its shares continuously.

Hyundai Futurenet holds a substantial amount of cash assets. At the end of last year, Hyundai Futurenet’s net cash balance amounted to about 624 billion won ($470 million), which is 1.7 times its market capitalization of 369.1 billion won as of Thursday.

Hyundai Futurenet’s major shareholders include Hyundai Home Shopping with a stake of 41.3 percent, Hyundai Shopping Co. at 11.3 percent, Hyundai Department Store Co. at 11.3 percent and Hyundai GF Holdings Co. at 5.9 percent. As a result, the proportion of Hyundai Futurenet’s publicly traded shares is only about 30 percent of its total shares outstanding.

Hyundai Futurenet has garnered market attention due to its largest shareholder, Hyundai Home Shopping, which is at the center of the family-owned business group’s ownership structure. Hyundai Department Store Group is managed by Chairman Chung Ji-sun and Vice Chairman Chung Kyo-sun through intermediate holding companies, Hyundai Department Store and Hyundai GF Holdings, respectively. While the group’s subsidiaries have not yet undergone a separation, the dominant shareholder structure has been reorganized except for Hyundai Home Shopping.

Earlier this year, Hyundai Department Store and Hyundai Green Food Co. sought a separation based on the stakes held by family members, but only Hyundai Green Food succeeded. Hyundai Department Store’s spin-off proposal was rejected at a shareholder meeting.

It is unclear where Hyundai Home Shopping, another strong cash cow for the group, will fall in the group’s governance structure, as it is a major shareholder of Hyundai GF Holdings with a 25 percent stake and Hyundai Department Store with 15.8 percent. The situation is similar for Hyundai Futurenet.