FCP Presents Five Proposals for "Governance Restoration" to S-1 Corporation

"Despite Leading the Industry, Valuation Is Only Half That of the Runner-Up"

"Current Management Has No Ties to Security Sector"

Activist fund Flashlight Capital Partners (FCP) has called on S-1 Corporation, the leading security company in Korea, to normalize its governance and enhance corporate value, presenting five key improvement measures. FCP criticized S-1 for its lower valuation compared to the second-largest player, as well as a distorted executive compensation structure, demanding a restoration of what it calls “new management spirit.”

On June 24, an FCP representative stated, “We have requested a shareholder meeting with the chairperson and CEO of the S-1 board to normalize corporate value,” and publicly released the letter sent to the board as well as the shareholder presentation.

The five proposals put forward by FCP are: ▲ announcement of a three-year target share price ▲ presentation of a five-year business vision ▲ a surplus cash plan ▲ transparent communication with shareholders ▲ a board of directors that abides by the Commercial Act.

First, FCP argued that the board must recognize the company’s severe undervaluation. Despite being the market leader, S-1’s EV/EBITDA valuation stands at just 3.3 times—less than half the 12.0 times that SK Shieldus, the second-largest player, was valued at several years ago.

FCP also raised concerns about shareholder returns. It criticized S-1 for keeping cash equivalent to half its market capitalization in low-interest bank deposits yielding only about 1.6% annually. FCP pointed out that while the KOSPI index has risen by 370% over the past 10 years, S-1’s share price has dropped by 30%. The fund demanded immediate share buybacks and cancellation, increased dividends, and disclosure of future new business investment plans. Additionally, FCP called for the company to present a concrete five-year business vision, including entry into new growth sectors such as silver care, drones, and cybersecurity.

FCP particularly cited “distorted governance” as the cause of S-1’s undervaluation. According to FCP, for the past 25 years, every S-1 CEO has been an executive dispatched from Samsung Group, with not a single security expert among them.

Lee Sanghyun, CEO of FCP, said, “If governance is corrected, S-1’s share price will first normalize to double its current value (KRW 150,000), and in the medium to long term, if it enters new businesses such as drones or silver care, it has the potential to be re-rated up to six times (KRW 450,000).” He added, “Since the amendment of the Commercial Act last July expanded fiduciary duties of directors to all shareholders, this issue will be a touchstone for how Samsung Group meets the new standard of protecting the interests of all shareholders.”

In response, an S-1 representative stated, “The management team appointed at the general meeting of shareholders has continued to secure sustainable growth drivers amid a rapidly changing market environment, and last year achieved record-high sales and operating profit. Our dividend amount and payout ratio have also exceeded the market average substantially at over 60%.” The spokesperson added, “Going forward, we will continue to review the best options to enhance corporate value while balancing the interests of all shareholders, and will communicate with the market.”

This content was produced with the assistance of AI translation services.