Tongyang (001520), an affiliate of Eugene Group, is pursuing a large-scale treasury share cancellation and stock consolidation simultaneously to enhance corporate value. The strategy is interpreted as an effort to normalize a stock price that has long faced undervaluation concerns and to drive a value-up based on the monetization of development projects and growth in new businesses.
Tongyang said Tuesday that its board of directors had decided to cancel a total of 24,611,979 treasury shares, comprising 24,439,999 common shares and 171,980 preferred shares. The cancellation is valued at approximately 71.9 billion won on a book-value basis, equivalent to 10.26% of total outstanding shares.
The cancellation will be conducted as a permanent retirement, with the shares not to be reissued in the market. The reduction in outstanding shares is expected to improve earnings per share (EPS) and book value per share (BPS).
Industry observers say the decision demonstrates the company's commitment to shareholder returns in numerical terms, as cases of canceling more than 10% of total outstanding shares are rare.
Alongside the treasury share cancellation, Tongyang is also pursuing a 2-for-1 stock consolidation. The move is aimed at reducing the share count to establish an appropriate stock price level and to alleviate its image as a low-priced stock. The agenda is scheduled to be finalized at an extraordinary shareholders' meeting on the 22nd.
Earnings improvement is also taking shape.
Despite the prolonged downturn in the construction industry, development projects such as Studio Eugenia, Itaewon 111, and Geumwang F1 are contributing to revenue generation and leading the improvement of the company's profit structure. Geumwang F1, in particular, successfully turned to profitability in the first quarter of this year, and the company expects it to achieve annual operating profit of more than 2 billion won.
Studio Eugenia, known as a content filming location, is also boosting profitability by enhancing space utilization, while the effect of expanding the share of high-margin development projects such as Itaewon 111 is beginning to materialize in earnest, the company explained.
Tongyang plans to enhance the profitability of its development businesses based on the stable cash-generating power of its existing ready-mixed concrete and construction materials operations, while cultivating AI data centers and senior housing as next-generation growth drivers.
Tongyang completed the project financing (PF) procedures for its "Bucheon Samjeong AI Hub Center" development project and broke ground on the 19th of last month.
The Bucheon Samjeong AI Hub Center is an AI-specialized data center being built with a total power receiving capacity of 9.8MW and an IT load of 7MW. Tongyang plans to develop the facility as an urban-hub data center to meet the growing demand for high-performance computing driven by the spread of generative AI and cloud services.
Starting with the Bucheon Samjeong AI Hub Center, Tongyang plans to pursue additional projects in stages, including the Incheon Guwol-dong AI Hub Center. Once the AI data centers in Bucheon and Incheon are completed, the company estimates their asset value will reach approximately 1 trillion won.
"The 71.9 billion won treasury share cancellation is a decision that demonstrates a strong commitment to enhancing corporate value and shareholder returns," a Tongyang official said. "We will continue to pursue our value-up strategy so that earnings improvements, based on the performance of our core development projects and new growth businesses, can lead to enhanced shareholder value."
