Hyundai Corporation Holdings (KOSPI: 227840, 현대코퍼레이션홀딩스) collects a fee every time somebody sells a generator, a power tool or an air conditioner under the HYUNDAI logo somewhere outside Korea. It also owns a quarter of a ₩8.7 trillion trading house, imports frozen meat, makes cardboard boxes in Cambodia and grows shiitake mushrooms in Lancashire. The whole thing is worth ₩122.2bn (US$86m) and no broker has published a report on it since May 2021.
Two companies here share almost the same name, so let me fix the labels first.
Holdco is Hyundai Corporation Holdings (227840). That is the one I am writing about.
Tradeco is Hyundai Corporation (KOSPI: 011760, 현대코퍼레이션), the general trading house. Holdco owns 26.38% of it.
Slightly less than one year of the brand division’s operating profit, for the brand division. And the frozen meat, the mushroom farms, the packaging plants, the property fund and ₩47bn of other investments arrive attached to it, as a gift.
I like the asset for two reasons.
It lasts, and it grows. The licence runs to 2049 and the rent on it was paid in full in 2019. The fees have grown 12% a year since 2020 and the profit on them 15%, and the money comes from independent dealers and manufacturers across the Americas, Europe and Asia, none of whom has anything else to put on the box.
It needs almost no capital. ₩37.8bn of licence fees came in over the last 12 months and ₩26.0bn survived as operating profit, sixty-nine won in every hundred. The licence itself uses none of the ₩96.9bn the group has tied up in inventory, farms and factories, so that profit arrives as cash.