Proxy Advisory Firm, Sustinvest

SUSTINVEST

Proxy Advisory Firm

Responsible investment, Proxy advisory

Sustinvest

Sustinvest is a specialized ESG research firm that provides comprehensive analysis on company-level ESG performance, industry-level ESG issues, and ESG-related regulations. In particular, we attempt to identify investment risks and opportunities associated with events such as corporate governance changes and M&A. We also conduct company visits and fundamental analysis to discover smaller companies with sustainable business model which are usually overlooked by institutional investors. Our focus is on Korean listed companies and not limited to specific sectors.  

Equity Bottom-Up

Samsung Electronics Co., Ltd. manufactures a wide range of consumer and industrial electronic equipment and products such as semiconductors, personal computers, peripherals, monitors, televisions, and home appliances including air conditioners and microwave ovens. The Company also produces Internet access network systems and telecommunications equipment including mobile phones.

<ul>
<li>All proposals at Samsung Electronics' March 19 shareholders' meeting were approved, despite opposition recommendations from Sustinvest, a Korean proxy advisory firm.</li>
<li>Sustinvest had recommended voting against outside director candidate Kim Jun-sung (Agenda 2-1-1) and inside director candidate Jeon Young-hyun (Agenda 2-2-1).</li>
<li>The approval of all agenda items indicates strong shareholder support for Samsung's current management direction despite some governance concerns raised by proxy advisors.</li>
</ul>


All proposals at Samsung Electronics' March 19 shareholders' meeting were approved, despite opposition recommendations from Sustinvest, a Korean proxy advisory firm.
Sustinvest had recommended voting against outside director candidate Kim Jun-sung (Agenda 2-1-1) and inside director candidate Jeon Young-hyun (Agenda 2-2-1).
The approval of all agenda items indicates strong shareholder support for Samsung's current management direction despite some governance concerns raised by proxy advisors.


Samsung Electronics(005930): Shareholders' Meeting Results

Korea, Equity Bottom-up, Events, Governance, Sustinvest

Sewon Park

Korea, Equity Bottom-up, Events, Governance

Event-Driven

Hyundai Motor Company manufactures, sells, and exports passenger cars, trucks, and commercial vehicles. The Company also sells various auto parts and operates auto repair service centers throughout South Korea. Hyundai Motor provides financial services through its subsidiaries.

On 6 July 2018, a public hearing on proposed revisions of the Fair Trade Act was held. In my earlier insight <a href="https://www.smartkarma.com/insights/korean-conglomerates-likely-to-embark-on-ownership-restructuring-some-thoughts-on-the-scenarios" target="_blank" data-smartkarma-citation="insights:21512">Korean Conglomerates Likely to Embark on Ownership Restructuring - Some Thoughts on the Scenarios</a>, I had discussed what problems Korean conglomerates would face depending on legislative changes following the local election. In the public hearing, the Special Committee for the Reorganization of the Act clarified the details of those changes. The proposed revisions are most likely to be…

On 6 July 2018, a public hearing on proposed revisions of the Fair Trade Act was held. In my earlier insight Korean Conglomerates Likely to Embark on Ownership Restructuring - Some Thoughts on the Scenarios, I had discussed what problems Korean conglomerates would face depending on legislative changes following the local election. In the public hearing, the Special Committee for the Reorganization of the Act clarified the details of those changes. The proposed revisions are most likely to be…

Updates on Korea's Chaebol Reforms - Proposed Revisions of the Fair Trade Act Were Specified

SK Telecom Co., Ltd. is a Korean mobile and telecommunications operator. The Company provides cellular voice, wireless data, and wireless internet services. SK Telecom also offers fixed line services and platform services.

지난 6월 13일, 대한민국에서는 지방자치단체의 장과 구성원을 뽑는 지방선거와 현재 비어있는 국회의원 의석을 채우기 위한 재보궐선거, 두 개의 선거가 열렸다. 여당인 더불어민주당(이하 더민주)이 두 선거에서 모두 압승함에 따라 이번 정부의 정책 방향에 힘이 실릴 것으로 보인다. 더민주는 재보궐선거에서 국회의원 12석 중 11석, 지방선거에서는 17명의 시도지사 중 14명을 차지한 반면, 현재 제1야당인 자유한국당은 국회의원 1명, 시도지사 2명을 확보하는데 그쳤다.더민주가 11석의 국회의원 의석을 추가로 확보하여 범여권의 의석수가 과반을 넘었다. 법안의 본회의 통과의 기준이 과반수라는 점을 감안할 때 정부 주도의 법안 통과 가능성도 한층 높아질 전망이다.

지난 6월 13일, 대한민국에서는 지방자치단체의 장과 구성원을 뽑는 지방선거와 현재 비어있는 국회의원 의석을 채우기 위한 재보궐선거, 두 개의 선거가 열렸다. 여당인 더불어민주당(이하 더민주)이 두 선거에서 모두 압승함에 따라 이번 정부의 정책 방향에 힘이 실릴 것으로 보인다. 더민주는 재보궐선거에서 국회의원 12석 중 11석, 지방선거에서는 17명의 시도지사 중 14명을 차지한 반면, 현재 제1야당인 자유한국당은 국회의원 1명, 시도지사 2명을 확보하는데 그쳤다.더민주가 11석의 국회의원 의석을 추가로 확보하여 범여권의 의석수가 과반을 넘었다. 법안의 본회의 통과의 기준이 과반수라는 점을 감안할 때 정부 주도의 법안 통과 가능성도 한층 높아질 전망이다.

한국의 재벌개혁, 다음 단계로 돌입

LG Corp. is a holding company, which operates subsidiaries including LG Electronics, LG Household & Health Care, LG Chem Ltd., and Dacom Corp. The Company's main business areas are electronics, chemicals, and household products manufacturing and telecommunications services.

Koo Bon-moo, a leader of the LG Group passed away on 20 May 2018. The attention has been focused on whether his eldest adopted son, Koo Kwang-mo, an executive director of LG Electronics, will be appointed as an executive director of LG Corporation, the holding company of LG Group, in the extraordinary general meeting held on 29 June 2018.Some have expressed their concerns over his capacity as a group leader since he has no experiences of leading one of the key affiliates in the group. In this…

Koo Bon-moo, a leader of the LG Group passed away on 20 May 2018. The attention has been focused on whether his eldest adopted son, Koo Kwang-mo, an executive director of LG Electronics, will be appointed as an executive director of LG Corporation, the holding company of LG Group, in the extraordinary general meeting held on 29 June 2018.Some have expressed their concerns over his capacity as a group leader since he has no experiences of leading one of the key affiliates in the group. In this…

A Few Things to Know Before Voting at the EGM of LG Corporation

I mentioned in the previous insight that the ruling party’s landslide victory would likely accelerate Moon’s legislative drive toward chaebol reform. Investors may wonder which companies would face challenges when proposed laws and regulations take effect.<a href="https://www.smartkarma.com/insights/the-ruling-party-s-landslide-victory-the-second-phase-of-chaebol-reform-has-begun-in-south-korea" target="_blank" data-smartkarma-citation="insights:21390">The Ruling Party’s Landslide Victory: The Second Phase of Chaebol Reform Has Begun in South Korea</a>Below I presented a list of some conglomerates that are required by the laws and regulations to take responsive actions. In the insight, I will discuss in details the types of ownership restructuring plans that the conglomerates are likely to come up with and some thoughts on the possible scenarios.<ul><li>Raising the required stake that a holding company holds in its listed subsidiaries from 20% to 30% (from 40% to 50% for non-listed companies) and requiring the holding company to lower the debt-to-equity ratio below 100% (not 200%) <ul><li>SK Group -<a href="https://www.smartkarma.com/entities/393" target="_blank" data-smartkarma-citation="entities:393:1">SK Holdings Co Ltd (034730 KS)</a> and <a href="https://www.smartkarma.com/entities/395" target="_blank" data-smartkarma-citation="entities:395:1">SK Telecom (017670 KS)</a> should acquire an additional 5% stake in SKT and an additional 10% stake in <a href="https://www.smartkarma.com/entities/16955" target="_blank" data-smartkarma-citation="entities:16955:1">SK Hynix Inc (000660 KS)</a>, respectively.</li><li>Celltrion Group - Celltrion Holdings should acquire an additional 10% stake in <a href="https://www.smartkarma.com/entities/991" target="_blank" data-smartkarma-citation="entities:991:1">Celltrion Inc (068270 KS)</a>.</li><li>Kolon Group - <a href="https://www.smartkarma.com/entities/9914" target="_blank" data-smartkarma-citation="entities:9914:1">Kolon Corp (002020 KS)</a> should acquire an additional 10% stake in <a href="https://www.smartkarma.com/entities/4805" target="_blank" data-smartkarma-citation="entities:4805:1">Kolon Life Science Inc (102940 KS)</a> and an additional 3% stake in <a href="https://www.smartkarma.com/entities/25907" target="_blank" data-smartkarma-citation="entities:25907:1">TissueGene Inc (950160 KS)</a>, respectively. <a href="https://www.smartkarma.com/entities/9914" target="_blank" data-smartkarma-citation="entities:9914:1">Kolon Corp (002020 KS)</a> should also lower its debt-to-equity ratio from the current level of 150% to 100%. </li></ul></li><li>Barring affiliates in conglomerates from delivering unfair gains to another affiliate where the controlling families hold a 20% or larger stake <ul><li>Hyundai Motor Group - <a href="https://www.smartkarma.com/entities/16963" target="_blank" data-smartkarma-citation="entities:16963:1">Hyundai Glovis Co Ltd (086280 KS)</a> should eliminate intra-group transactions. Or its controlling family should sell down their shares in Glovis.</li><li>HDC Group - <a href="https://www.smartkarma.com/entities/27203" target="_blank" data-smartkarma-citation="entities:27203:1">HDC I-Controls Co Ltd (039570 KS)</a> should eliminate intra-group transactions. Or its controlling family should sell down their shares in HDC I-Controls.</li><li>Hyundai Department Store Group - <a href="https://www.smartkarma.com/entities/19560" target="_blank" data-smartkarma-citation="entities:19560:1">Hyundai Greenfood Co Ltd (005440 KS)</a>  should eliminate intra-group transactions. Unlike the case of Hyundai Glovis and HDC I-Controls, the controlling family is not willing to lose ownership in <a href="https://www.smartkarma.com/entities/19560" target="_blank" data-smartkarma-citation="entities:19560:1">Hyundai Greenfood Co Ltd (005440 KS)</a>, which is a de-facto holding company of the group. </li></ul></li></ul>

I mentioned in the previous insight that the ruling party’s landslide victory would likely accelerate Moon’s legislative drive toward chaebol reform. Investors may wonder which companies would face challenges when proposed laws and regulations take effect.The Ruling Party’s Landslide Victory: The Second Phase of Chaebol Reform Has Begun in South KoreaBelow I presented a list of some conglomerates that are required by the laws and regulations to take responsive actions. In the insight, I will discuss in details the types of ownership restructuring plans that the conglomerates are likely to come up with and some thoughts on the possible scenarios.Raising the required stake that a holding company holds in its listed subsidiaries from 20% to 30% (from 40% to 50% for non-listed companies) and requiring the holding company to lower the debt-to-equity ratio below 100% (not 200%) SK Group -SK Holdings Co Ltd (034730 KS) and SK Telecom (017670 KS) should acquire an additional 5% stake in SKT and an additional 10% stake in SK Hynix Inc (000660 KS), respectively.Celltrion Group - Celltrion Holdings should acquire an additional 10% stake in Celltrion Inc (068270 KS).Kolon Group - Kolon Corp (002020 KS) should acquire an additional 10% stake in Kolon Life Science Inc (102940 KS) and an additional 3% stake in TissueGene Inc (950160 KS), respectively. Kolon Corp (002020 KS) should also lower its debt-to-equity ratio from the current level of 150% to 100%. Barring affiliates in conglomerates from delivering unfair gains to another affiliate where the controlling families hold a 20% or larger stake Hyundai Motor Group - Hyundai Glovis Co Ltd (086280 KS) should eliminate intra-group transactions. Or its controlling family should sell down their shares in Glovis.HDC Group - HDC I-Controls Co Ltd (039570 KS) should eliminate intra-group transactions. Or its controlling family should sell down their shares in HDC I-Controls.Hyundai Department Store Group - Hyundai Greenfood Co Ltd (005440 KS)  should eliminate intra-group transactions. Unlike the case of Hyundai Glovis and HDC I-Controls, the controlling family is not willing to lose ownership in Hyundai Greenfood Co Ltd (005440 KS), which is a de-facto holding company of the group. 

Korean Conglomerates Likely to Embark on Ownership Restructuring - Some Thoughts on the Scenarios