Hyundai Development Company is expected to hold a board meeting on December 5 to resign the company and make a transition to a holding company in earnest.

According to the industry on December 4, Hyundai Development Company will be transformed into a holding company by Hyundai Industrial Company (tentative name) and Hyundai Industrial Company (tentative name), both of which are investment companies.

The signal to switch to a holding company started when Hyundai Development purchased aggressively treasury stocks. Hyundai Development, which bought 1.8 million shares (2.39 %) of treasury stocks at the end of last year, increased to 7.03 % by purchasing 1.5 million shares from 2 million shares from January to April and 1.5 million shares from April to July.

The industry is putting the interpretation that the conversion of the holding company to Hyundai Industrial Development is to increase the dominance of Chung Mong-kyoo (photo) in the group. If the company is split and shares are exchanged among affiliated companies, voting rights will be revived and Chung, the largest shareholder, will become more dominant.

In this process, when Hyundai Development completes its spin-off, the possibility of a merger with its parent subsidiary, iControl, is heightened. Chung`s stake in Hyundai Development is 13.56%. If he revives his voting rights after merging with iControls through a conversion to a holding company, he will be able to secure a stake of close to 30%. iControls is a core company that is expected to exceed annual sales of 200 billion won next year, as it is a building solution and a smart home company that is growing through internal transactions with Hyundai Development Company.

Meanwhile, iControls has been performing well every year since Hyundai Development aggressively expanded its housing business in 2014. Sales increased from KRW 131.1 billion in 2014 to 188.9 billion won in 2016. Hyundai Development has increased its housing supply to twice the size of last year, and the number of households to be sold from 2015 to next year is 50,000. We expect the domestic IoT market to grow in domestic housing, as we expect aggressive orders to take place next year.

Kim Min-hyung, a senior research fellow at the Korea Institute of Construction Industry, said, "If the merger between the two companies is completed, the housing market is also smart, and synergies are expected to be sufficient." If the company buys a stable job due to internalization through its subsidiaries, "He said." We have to be careful that we can weaken our capabilities in leaps and bounds."


By Park Sang Gil sweatsk@


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