By Park Hyong-ki
Staff Reporter
Shares of SFA Engineering, a medium-sized LCD equipment maker, closed higher, boosted by the news that the Korea Corporate Governance Fund, or better known as ``Jang Ha-sung Fund,'' bought a 5.2 percent stake in the company.
SFA shares closed up 700 won, or 1.16 percent, at 60,800 won.
The company also manufactures automated systems for logistics.
Analysts say its businesses are fundamentally strong on solid global demand for LCDs.
As its main client is Samsung Electronics, which is the world's No.1 LCD TV producer and continues to make large investments in the development of such products, SFA has been enjoying steady growth over the years.
It is expected to post about 16 billion won in operating profit in the fourth quarter, up more than two-fold from last quarter, with the full-year figure reaching 40 billion won. Analysts are projecting that the company will achieve over 58 billion won in operating profit next year.
Despite its solid growth potential, the company has room for improvement in governance structure. The company has no major shareholder actively involved in key management decisions. Its CEO Shin Eun-sun runs the company.
``I believe Jang Ha-sung Fund decided to buy the stake because of its weak governance structure,'' said Moon Hyun-sik, an analyst of Meritz Securities.
A majority of the company's big shareholders are asset management companies such as Fidelity, Mirae Asset Investments and Samsung Investment Trust Management. CEO Shin has a 0.9 percent stake.
Moon said asset management shareholders do not actively engage in management given that they receive generous dividends and its chief executive has been soundly managing the company.
The Corporate Governance Fund, however, is aiming to overhaul the company's governance structure by participating in management.
The fund said its goals are to strengthen the independence of the firm's board decision-making and establish an audit unit to protect shareholders' rights. It also aims to boost management to be more shareholder and ethics-oriented.
The fund, headed by shareholder activist Jang, was launched early last year, with the prime aim of improving corporate transparency and governance at undervalued firms through stock purchasing, and raising the value of such companies. Jang is also the dean of Korea University's business school.
The fund is co-managed by the U.S.-based Lazard Asset Management and the Center for Good Corporate Governance, a Seoul-based research institute for the advancement of the country's corporate governance.
Analysts say the fund is most likely to help boost the company value in the long-term.
``It will raise the potential of the company,'' said Kang Yoon-heum, an analyst of Daewoo Securities.
phk@koreatimes.co.kr