Hyundai Home Shopping Case Study Demonstrating the Need for More Effective Stewardship by the NPS
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Hyundai Green Food and Hyundai Livart Identified as Targets for Dividend Improvement by the NPS Hyundai Department Store Group (As of 1H ‘18) Chung, Ji-Sun Chung, Kyo-Sun 73% 17% 13% 23% Hyundai Hyundai 12% Hyundai A&I Department Green Food Store 100% 16% 25% 40% 45% Hyundai Hyundai Everdigm Hyundai Livart Shopping Home Shopping 1% 35% 35% 100% Hyundai Rental Hyundai HCN Handsome Care Source: Maeil Business; CEO Score Daily; Korea Financial Supervisory Services DART – Semiannual Reports Jan 2019 Page 3
But We Believe Hyundai Home Shopping (Hyundai) Has Greater Potential for Improvement Hyundai Department Store Group (As of 1H ‘18) Chung, Ji-Sun Chung, Kyo-Sun 73% 17% 13% 23% Hyundai Hyundai 12% Hyundai A&I Department Green Food Store 100% 16% 25% 40% 45% Hyundai Hyundai Everdigm Hyundai Livart Shopping Home Shopping 1% 35% 35% 100% Hyundai Rental Hyundai HCN Handsome Care Source: Korea Financial Supervisory Services DART – Semiannual Reports Jan 2019 Page 4
Since Listing in 2010*, Hyundai’s Shareholders Have Lost Approx. 17% (Share Price Change + Dividend Yield) Hyundai’s Share Price (Sep. 13, 2010 to Nov. 30, 2018) ₩ 200,000 ₩ 180,000 ₩ 160,000 ₩ 140,000 ₩ 120,000 ₩ 100,000 ₩ 80,000 9/13/2010 9/13/2011 9/13/2012 9/13/2013 9/13/2014 9/13/2015 9/13/2016 9/13/2017 9/13/2018 Total Shareholder Return -17.0% Price Change -23.5% Assuming Dividends Reinvested in the Security 6.5% Source: Bloomberg *Sep. 13th, 2010 Jan 2019 Page 5
…..While Hyundai Has Been Making Profits Cumulative net income of 70% since listing* 100% Cumulative 90% Net Income 80% since listing 70% Net cash equivalents*** 60% 100% 50% 40% 70% 30% 40% 20% 10% 0% Market Value Right After Listing (Sep. 13th, Cumulative Net Income from 2010 4Q to 2018 2010)** 3Q If net cash (40%) and cumulative net income (70%) were paid out to shareholders, total return would have been > 100% Source: Bloomberg; Korea Financial Supervisory Service DART-Annual Reports. *From Sep. 13, 2010 to Nov. 30, 2018 **MV was approx. $1.4B ($1 = ₩1,120 applied for the entire presentation) based on share price of ₩130,500 at Sep. 13, 2010. ***We estimate that most has not been used. Jan 2019 Page 6
Korea National Pension Service Has Suffered Estimated Losses of $22M (-14%) Over the Last 6 Years NPS’ holding of Hyundai Home Shopping 1,800,000 ₩ 200,000 1,600,000 ₩ 180,000 1,400,000 1,200,000 ₩ 160,000 1,000,000 ₩ 140,000 800,000 600,000 ₩ 120,000 400,000 ₩ 100,000 200,000 0 ₩ 80,000 12/4/2012 12/4/2013 12/4/2014 12/4/2015 12/4/2016 12/4/2017 Position (Left) Share Price (Right) First holding date of recent major ownership Oct. ‘12 Current position (% of outstanding number of shares) 12.0% Estimated average cost basis per share 122,191 Current share price (as of Nov. 30 th , 2018) 99,800 Source: Bloomberg; Based on Nov. 30, 2018; Gain/Loss = ((Current share price – Estimated average cost basis per share) x Current number of share holdings) + (Dividend per share of each year from first year of purchase to 2017 x number of share holdings at each Sep. 30 from first year of purchase to 2017)), If first year purchase was done after Sep. 30, applied Dec. 31 number of share holdings for that year. Jan 2019 Page 7
Minority Shareholders Own Approx. 60% of Hyundai Hyundai Ownership Estimate (As of Dec. 31, 2018) Foreign Investors Korean Investors Hyundai Department Store Group 27% Minority Shareholders 32% 41% Source: FN Guide – Company Guide; Korea Financial Supervisory Service DART – Quarterly Report. Jan 2019 Page 8
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