A growing number of larger companies in South Korea are pushing up their earnings through non-operating income rather than operating activities.
2014.02.03 15:27:52
A growing number of larger companies in South Korea are pushing up their earnings through non-operating income rather than operating activities.
Non-operating income has a limitation of being a one-off as it does not derive from operating activities. But as a series of earnings shocks recently dampened the market, non-operating income is serving to lift investor sentiment.
Samsung Engineering sold its 34 percent stake in Glass Tower in Samseong-dong, Seoul, and SEI Tower in Dogok-dong in December of last year and reflected proceeds from the sale into its earnings for the fourth quarter (Q4) of last year, said sources in the financial investment sector Monday.
Consequently, Samsung Engineering posted 134 billion won ($123.9 million) in pre-tax profit and 89.7 billion won in net profit in Q4 of last year, returning to the black quarter-on-quarter.
Given that 130 billion won from the building sale that falls into non-operating income accounted for a large part of 134 billion won pre-tax profit, it significantly boosted the company’s earnings.
Kia Motors also posted brisk net profit in Q4 of last year on the back of non-operating income.
This comes as 212.3 billion won in one-off gains from sale of its subsidiary Hyundai Hysco’s cold rolled steel division was booked as Kia Motors’ non-operating income.
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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments.
KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community.
KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.
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