"Monami Posts a 10 Billion Won Deficit, But Consistently Awards 4.7 Billion Won in Contracts to the Third-Generation Family Company"

Monami in the Red: Nearly 20 Years of Steady Contracts for the Third Generation's Company

TPEX Amasses 4.5 Billion Won: Spotlight on Its Role as Succession 'War Chest'

Hearts for Patriotism, No Real Stock Support: Dividends Flow to the Owner

Stationery company Monami is facing harsh scrutiny from the market as it appears to focus on the succession of management rights to ‘third-generation owner’ Jae-Hwa Song, President of Monami (age 39), even amid severe poor performance and the risk of being delisted. While their new beauty business is also plummeting, President Song continues to consistently direct Monami’s work to TPEX, a logistics company where he is the largest shareholder. Meanwhile, he has neglected any measures to boost the share price.

Monami has been giving business to TPEX for nearly 20 years. During this period, TPEX has accumulated billions of won in retained earnings. In particular, with the official launch of the third-generation management system this year, suspicions are growing that TPEX may be used as a financial vehicle for the succession of management rights in the future. This could occur, for instance, if President Song acquires the stake of his father, Honorary Chairman Hakyoung Song (age 67), as part of plans to increase his equity in Monami.

TPEX Contracts Remain Steady Despite Monami’s Losses

According to sources in the relevant industry on August 20, TPEX, which was established in 2008 and is headquartered in Anseong, Gyeonggi Province, recorded annual sales of 5.9 billion won, operating profits of 300 million won, and net profits of 100 million won last year, maintaining a steady surplus.

The most notable aspect is the source of TPEX’s sales. Last year, Monami accounted for 56.5% of TPEX’s main purchasers. In other words, over half of TPEX’s sales came from Monami alone, making Monami in effect the main source of TPEX’s funds. In its business report, Monami categorizes TPEX as “other related party” rather than as a subsidiary or affiliate. However, the business ties between the two are no less strong than those found in many subsidiaries.

Monami paid TPEX 4.7 billion won in purchases and other expenses last year. Meanwhile, Monami’s own situation is completely different. Monami suffered sales of 131 billion won, an operating loss of 5.9 billion won, and a net loss of 10.7 billion won last year. While Monami has been saddled with prolonged deficits, TPEX’s performance has been quite different. Although TPEX’s capital amounts to merely 200 million won, its retained earnings swelled to 4.5 billion won last year, 17 years after its establishment.

99.5% Family-Owned TPEX... A ‘Hidden Card’ for Succession?

TPEX first became publicly known in 2016 during the ‘power abuse scandal’ under the Park Geun-hye administration. At the time, suspicions arose that Samsung had handed work to Monami in return for Monami purchasing an equestrian center in Germany to support Choi Soon-sil's daughter, Chung Yoo-ra. Monami stated then that TPEX, unrelated to the company, and then-CEO Hakyoung Song personally acquired the property together.

However, TPEX was hardly unrelated to Monami from the beginning. The origin of TPEX traces back to the founding of ‘Express Line’ in 2008, jointly invested by Monami (80%) and its affiliate Onemate (20%). The shares later transferred to the owner’s family, transforming TPEX into a family-run company with President Song (50%) and his mother, Huisook Hong (49.5%), together holding 99.5% of the shares. In the end, the logistics company established by Monami became a family enterprise but continued to receive Monami’s logistics work.

The spotlight on TPEX’s shareholding structure is due to the issue of third-generation succession. President Song currently holds only 1.87% (353,582 shares) of Monami’s stock, which is far less than the shareholding of his father, Honorary Chairman Song (13.76%), and others, leaving his control base weak. However, if TPEX acquires shares in Monami, President Song would be able to increase his influence over Monami through a corporation where he is the largest shareholder. This leads to speculation that TPEX could serve as the “ammunition” for future succession.

Selling as a ‘Patriotic Stock’ Peaks... Saying ‘Thank You’ During Delisting Risk

There is criticism that, while devoting considerable attention to succession, the enhancement of shareholder value has been neglected. Even last year, when Monami posted net losses in excess of 10 billion won, the company still distributed cash dividends, allowing the owner family to collect an estimated 160 million won. This means that, even in the red, the owner family cashes in.

Past conduct has also come under fire. During the boycott of Japanese goods in 2019–2020, Monami and its owner family disposed of large quantities of treasury stock and held shares in succession following a surge in share price as Monami was highlighted as a ‘patriotic theme stock,’ sparking controversy. Though Monami explained the moves as securing investment resources and paying gift taxes, critics accused the owner family of profiting from the stock’s rally driven by “patriotic marketing.”

Recently, as Monami became subject to the raised KOSPI delisting market capitalization threshold (30 billion won), it was driven into a delisting crisis. However, “patriotic buying” to save the “national ballpoint pen” pushed the market cap up to the 70 billion won range. President Song even posted a handwritten thank-you letter on the official website, but measures to support the share price never materialized, and the market cap ultimately fell back below 30 billion won. Market sentiment regarding President Song’s letter has been far from favorable; critics argue that, since the risk of delisting could disrupt his succession plans, his actions appear to have served merely as a means of crisis management.

Monami headquarters building in Yongin, Gyeonggi Province, and a handwritten thank-you letter by Jae-Hwa Song, President of Monami, published on the official website. Monami

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