RSUPPORT's Financial Story

Today I came across an interesting article: Forced liquidation of Nikkei options without a margin call is also legal at the bottom. While looking into the details, I found an interesting fact. The entity that suffered the loss was Winners Asset Management, and an article said RSUPPORT, an IT company, was the de facto majority shareholder of that company.

The strangest thing was why RSUPPORT, a listed company in the software business, held a stake in an asset management company. When I actually checked the financial statements, there was a 21.1 billion won loss from derivatives in 2020.

As a result, despite an operating profit of 18.4 billion won in 2020, the net income was a loss. Still, the cash flow coming into the company was steady. In particular, in 2021, when Japan's NTT Docomo participated as a strategic investor and bought a stake, performance in '21 was also very good.

But the company's finances grew increasingly strange. As money piled up, PBR and cash rose, but the dividend payout ratio was very low except in '21, when it posted a surprise performance. In other words, the company kept hoarding cash. Nor was this an industry that needed to pile up cash due to heavy CAPEX spending, given the nature of the software business. It already had a solid position in the industry.

Another thing that stood out was the cash flow. As soon as money was earned, it kept flowing out through investing activities.

Retained earnings kept growing, and tangible assets kept increasing. In 2024, even bonds payable and borrowings increased.

While RSUPPORT's real estate increased, the stock price plunged from a high of 23,650 won to 2,500 won on December 13 — a near 90% drop — before barely rebounding to the 3,000-won range. Moreover, financial costs increased due to the borrowings. I'm not sure whether it's right to invest in a company that, even when it earns money, invests in real estate and derivatives.