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[SUPER RICH] AmorePacific chairman now Korea’s third-richest man

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Published : 2014-08-18 20:47
Updated : 2014-08-18 20:47

Aug. 13, 2014, was a historic day for AmorePacific Group chairman Suh Kyung-bae. The stock price of the nation’s top cosmetics brand closed at 2,068,000 won ($2,000) for the first time in its history, becoming a so-called golden stock by surpassing the 2 million won mark.

The surge of AmorePacific shares made Suh the third-richest person in the country, behind Samsung Group chairman Lee Kun-hee and Hyundai Motor Group chairman Chung Mong-koo.

Suh owns 626,445 common stocks of AmorePacific, a 10.7 percent stake in the company. He also holds 122,974 preference shares. The combined value of his shareholdings was worth 6 trillion won as of Aug. 13. The amount is double the 3 trillion won tally at the beginning of the year. 
Suh Kyung-bae. (Illustration By Park Gee-young)

“This means that Suh’s wealth increased by 14 billion won every day with just the stocks he has owned since Jan. 1, 2014,” a market insider said.

“He is about 1.4 trillion won behind Chung Mong-koo but may catch up with him,” he added.

Thanks to the continued growth of the Seoul-based beauty goods maker, lifted by explosive demand among Chinese consumers ― the company posted 128.6 billion won in net profit for the second quarter, a 30 percent jump on-year ― the stock price may climb another 15 percent by year-end, industry watchers said.

According to market experts, the key to AmorePacific’s success is having gone global earlier than market competitors. The company aims to boost overseas sales to account for 50 percent of the total by 2020, up from the current 20.2 percent.

Suh, who became chairman in 1997, has been focusing on beauty products by weeding out projects involving finance, sports and fashion.

Instead, the chairman suggested the vision of becoming “Asia’s beauty creator.”

Nearly all the company’s brands, ranging from the high-end AmorePacific and Sulwhasoo to the affordable Hera, Mamonde and Laneige, and all the way to the low-end Innisfree and Etude House, are sold at 4,500 stores in 12 countries. Its perfume brand Lolita Lempicka is distributed to more than 100 countries.

And the company is scheduled to open a manufacturing plant in China later this year with the capacity to produce more than 100 million units annually.

At local stores, thanks to hallyu, foreign tourists have been emptying the shelves of AmorePacific products. This prompted the company to set a limit of 10 units per item to a single visitor at major duty-free stores in Seoul.

“The company’s Chinese business has been showing an average annual growth rate of 28.8 percent over the past three years, which is higher than any other Korean global enterprise,’’ said Cho Hyun-ha, an analyst at Shinhan Investment.

“With the new plant and other factors, the sales will remain strong there for the next few years.”

But market experts also suggest that Suh will have to resolve domestic issues such as unfair business activities in order to become a truly global conglomerate.

On Monday, the Fair Trade Commission slapped AmorePacific Group with a 500 million won fine for mistreating salespeople and contractors by relocating their workplaces and readjusting their working environments.

“Though it could be regarded as a long-standing malpractice, large corporations such as AmorePacific should make efforts to eradicate it,” said Kim Sung-sam, an FTC official.

By Bae Ji-sook (baejisook@heraldcorp.com)

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