The stock price of SNT Holdings, the holding company of the SNT Group focused on automotive parts and defense, rose 161%, from 22,000 won at the beginning of the year to 57,500 won on the 4th.
Expectations for the growth of key affiliates of the group, such as SNT Motiv, which produces automotive parts and small-caliber firearms, and SNT Dynamics, which manufactures transmission systems for armored vehicles, are believed to have influenced this.
Recently, the SNT Group's move to raise 200 billion won using its own stocks has also had an impact, as President Lee Jae-myung has included 'mandatory stock repurchases' in his capital market pledge, prompting SNT Group to proactively respond with stock sales, which served as a positive signal to the market.
On the 23rd of last month, SNT Group announced that IMM Credit and Solution, a private equity firm, decided to invest 200 billion won in exchange bonds (EB) for SNT Holdings and SNT Dynamics, among other group affiliates.
The 2.68% (20 billion won) of SNT Holdings' treasury stock and the 7.84% (70 billion won) equity stake held by the company in SNT Energy total 90 billion won. The company will also issue 110 billion won in exchange bonds targeting 7.59% of SNT Dynamics' treasury stock. This funding will flow into the SNT Group on the 14th of next month, and the group plans to invest it in research and development (R&D) and facilities.
Some analysts suggest that when IMM Credit and Solution later exercises the exchange rights of the exchange bonds, the treasury stocks may be released into the market, potentially diluting Chairman Choi Pyung-kyu's (73) equity in SNT Holdings and negatively impacting the group's governance structure.
However, the SNT Group explained, 'Although Chairman Choi holds 50.76% of SNT Holdings, and while the effective equity ratio may decrease slightly, the impact will not be significant.' They noted that the group's disclosure of growth through enhanced R&D has provided a positive signal to the market.
◇R&D management... Growth based on automotive parts and defense
'R&D-centered management' is a core growth strategy of Chairman Choi Pyung-kyu, the founder of the SNT Group. An engineer by training and a graduate of Kyunghee University with a degree in mechanical engineering, Chairman Choi consistently emphasizes technology. In his New Year's speech this year, he also urged all employees to innovate, saying, 'We must strengthen our independent development capabilities in key technologies.'
In fact, the proportion of R&D compared to last year's revenue of key affiliates of the SNT Group shows that SNT Motiv accounted for 2.1% (19.9 billion won), while SNT Dynamics accounted for 2.6% (15.9 billion won). It is rare for domestic medium-sized manufacturing corporations to invest more than 10 billion won annually in R&D.
Mergers and acquisitions (M&A) are also part of the SNT Group's growth strategy. Chairman Choi has led the group's growth by acquiring companies such as SNT Savings Bank (formerly known as Gyungyu Mutual Savings Bank) in 2002, SNT Dynamics (formerly Tongil Heavy Industries) in 2004, and SNT Motiv (formerly Daewoo Precision) in 2006.
In particular, the automotive parts and defense sectors have become the core pillars of the SNT Group. SNT Dynamics has seen its revenue rise from 263.8 billion won and an operating profit of 8.4 billion won in 2004 to 614.5 billion won and an operating profit of 110.5 billion won last year. Similarly, SNT Motiv's revenue and operating profit increased from 516.8 billion won and 23.6 billion won in the year it was acquired in 2006 to 968.9 billion won and 98.1 billion won, respectively, last year. Both companies are expected to maintain strong performance due to the accelerating electric vehicle era and the increase in global defense spending driven by the effects of the Russia-Ukraine war during the new Cold War.
◇Choi Pyung-kyu's one-man system... Second-generation management is 'uncertain'
The governance structure of the SNT Group is clearly based on Chairman Choi alone. Chairman Choi is the largest shareholder with a 50.76% equity stake in SNT Holdings. At the same time, SNT Holdings controls key affiliates including SNT Motiv (with a 45.12% equity share), SNT Dynamics (42.27%), and SNT Energy (60.49%). Chairman Choi also holds 100% of the equity in SNT Savings Bank.
Currently, Chairman Choi is leading the overall management while planning the future strategy of the SNT Group. Kim Do-hwan, the representative of SNT Holdings and Chairman Choi's son-in-law, is also involved in management. Representative Kim oversees the group's overall financial and legal affairs as the CEO of the holding company.
However, the succession structure of the SNT Group remains uncertain. Chairman Choi has three children: Choi Eun-hye (46), Choi Da-hye (42), and Choi Jin-wook (30), but none of them are currently employed by the group. The most likely successor, Jin-wook, reportedly graduated from college in the United States and is working at a local company.
The equity stakes of Chairman Choi's children are also low. Eun-hye and Da-hye each hold 3.94% and 2.34% of SNT Holdings' equity, while Jin-wook's stake is only 1.83%. The business community is watching closely to see when Jin-wook will join the SNT Group, how he will undergo management training, and whether he will achieve success. It is believed that equity succession may occur during this process.
Jeong Seong-yeob, the representative of the global governance consulting firm Morrow Sodali in Korea, stated, 'The SNT Group's second generation is neither participating in the management of the group nor holding significant equity stakes in the holding company.' He added that 'Initially, someone among the children has to join the group and demonstrate their management abilities; then, the equity succession is expected to occur gradually.'