Shares of Korean papermaker PaperCorea plateau as it goes on sale

Kospi-listed PaperCorea shares rallied on Tuesday as Korea’s oldest papermaker returns to the sell block.

United Asset Management Company (UAMCO) recently appointed EY Hanyoung to arrange the sale of its 61.98% majority stake and bond holdings for about 350 billion won ($281 million). Preliminary offers will likely be accepted by the end of next month.

PaperCorea shares rallied to the authorized daily limit of 30% at 3,025 won at noon on Tuesday.

PaperCorea confirmed the attempted sale of its largest stakeholder, but said nothing else had been decided yet.

PaperCorea, founded in 1944, manufactures paper products such as newsprint, printing papers and industrial papers. Since the acquisition in 2017, UAMCO has been active in improving the value of the business with the transfer of the Gunsan factory and the purchase of the new printing factory site.

PaperCorea is the country’s leading packaging paper maker with a 62% market share last year. With superior quality, its products are supplied to fresh food delivery startup Kurly, coffee franchise Starbucks Coffee Korea, and fast food chain McDonalds’ Korea.

In the newsprint market, the company holds a 22% share, the third after Jeongju Paper and Daehan Paper.

As part of the business portfolio diversification efforts, PaperCorea started the development of real estate assets in 2015 and spearheaded The Ocean City apartment complex development project in Gunsan, North Jeolla Province.

PEFs are interested in PaperCorea’s Cheongju plant, with a possibility of upgrading the facilities for the production of corrugated cardboard for packaging and delivery boxes at the growing demand of operators of e-commerce sites. Located near the Cheongju Interchange (IC), the plant has easy and quick access to most parts of the country within three hours, which also enhances the attractiveness for investors.

PaperCorea posted an operating profit of 31.4 billion won last year, down 9.2% year on year, with sales down 10% to 435.2 billion won. Its debt ratio reached up to 1,000%. The seller stresses, however, that the financial burden will be reduced when he receives payment for the development projects of real estate assets.

By Kang Woo-seok and Lee Ha-yeon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

Virginia C. Taylor