이 기사는 2020년 03월 26일 08:00 thebell 에 표출된 기사입니다.

South Korea’s IMM Private Equity has made changes in the management of its portfolio company, ABLE C&C, in an effort to maintain the growth momentum of the company after its successful turnaround last year.

The board of ABLE C&C, the cosmetics maker that owns the Missha brand, recently held a meeting and approved the appointment of Cho Jeong-yeol as co-chief executive along with the existing chief executive Lee Hae-joon, sources familiar with the matter said on Monday.

With this change, the company has now adopted a two-leader system. Cho, who previously served as chief executive of pharmaceutical company Handok and car-sharing app operator SoCar, has a high reputation as a marketing specialist. Handok and SoCar are also one of IMM PE’s previous portfolio companies, though Cho had not been in her chief executive role at the two companies during the PE firm’s investment period.

This is the seventh time that ABLE C&C changed its chief executive since IMM PE first invested in the company in April 2017 when it bought 25.54 percent of the company from then-chairman Seo Young-pil. The PE firm has since raised its stake to 59.2 percent through a tender offer and the purchase of new shares. Seo completely stepped away from the company in 2019 when he stepped down from his position on the board.

The most recent change to the management of ABLE C&C before this one was done in July 2019 when Lee Hae-joon, now co-chief executive, was chosen as a new leader after his predecessor Lee Sae-hoon, who previously led the North America team at LG Household & Health Care, left the company upon the completion of his two-year term of office.

After gaining a controlling stake in ABLE C&C, IMM PE has continued to focus on increasing the value of the company by boosting its revenue growth through a series of mergers and acquisitions and restructuring its stores. These efforts have borne fruit: ABLE C&C posted 1.8 billion won of operating profit last year, achieving a successful turnaround.

But the stock market appears to remain skeptical about the company’s growth prospects. The price of ABLE C&C stock ended last week at 6250 won, more than 78 percent lower than the level seen in May 2017 when IMM PE completed a tender offer. The recent ABLE C&C’s share price represents a price-to-book (P/B) ratio of 0.65. Industry watchers say that the cosmetics company has faced strong headwinds due to slowing domestic demand and deteriorating consumption.

In an environment where health and beauty stores have become the main distribution channel for cosmetics products, ABLE C&C plans to speed up its efforts to transform its single-brand stores into NUNC outlets, the company’s new multi-brand shop which sells not only its own brands like Missha and A’pieu but also other beauty brands owned by domestic and foreign cosmetics makers. Through NUNC stores, IMM PE aims to change Missha’s brand image of mid to low-priced cosmetics products, and this is where Cho’s marketing expertise is needed.

There are also other challenges the company is facing. Its marketing and advertising expense rose by more than 67 percent last year and its working capital also increased about 50 percent year-on-year due to rise in inventory and receivables.

Market watchers expect the company’s expense relating to renewing offline stores to increase in the future. The total number of ABLE C&C’s stores is estimated to be around 660 as of September 2019, among which about 20 are NUNC stores. ABLE C&C plans to increase the number of NUNC stores to more than 150 by this year.

(By reporter Rho Ar-rum)