Ryu Kyung-soo, chief financial officer of GS Home Shopping
On Aug. 23, South Korea’s leading home shopping operator GS Home Shopping Inc. sold its 6.1 percent treasury stock to its holding company GS, leading to a better control by GS on the subsidiary with a 36.1 percent stake and additional cash generation worth 88 billion won ($78 million) in GS Home Shopping. The cash has become part of dry powder worth up to 800 billion won for GS Home Shopping in its investment quest.
"We will dole out the money for startups associated with AI, big data and other 4th industrial revolution applications. We are internally planning on some 1 trillion won investment over the next five years,” said Ryu Kyung-soo, chief financial officer of GS Home Shopping told Maeil Business Newspaper on Tuesday.
So far, GS Home Shopping channeled about 170 billion won into 300 domestic and overseas startups, 16 of which received direct investment.
GS Home Shopping has about 800 billion won in cash or cash equivalents. Net cash excluding its accounts payable to suppliers amounts to 600 billion won.
The company has introduced open innovation rather than more traditional vertically integrated approaches to explore new business models through venture investment, Ryu said.
Touching on the company’s buy-back program, he said "additional buy-back will be implemented according to the stock market condition,” adding 30 billion won was set for this early this year.
Currently, GS Group controls 37.8 percent of GS Home Shopping. Including the ownership by its strategic partner Hanjin Group, its total control reaches 45.8 percent. It is still higher than 38 percent controlled by foreign investors, but it wants to up the portion to over 50 percent to ensure stable management, according to analysts. That means GS Home Shopping may use the buy-back program to add a 4 percent stake.
GS Home Shopping has stuck to a high dividend policy, spending more than 40 percent of its net profit since 2014. “We will continue the dividend ratio at the industry’s top level,” Ryu said.
GS Home Shopping’s expected revenue is 1.18 trillion won for fiscal 2017, with an operating profit of 146.1 billion won. That’s up by 8.2 percent and 15.6 percent, respectively, from a year ago.
Shares of GS Home Shopping ended Thursday at 3.1 percent at 220,500 won.
By Yoon Jin-ho and Ko Min-suh
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