Story of a Big Player from Gangnam

After getting off the phone with the branch manager of Gangnam Stock Brokerage Company, Gun-Ho thought about it with his eyes closed.

‘The total number of shares that were issued so far is 26 million. Assuming that the unit share price is 20,000 won, Dyeon Korea’s market capitalization is 520 billion won…’

When Gun-Ho was lost in thought, he received a call from Director Woon-Hak Sim in China.

“Sir, it’s Woon-Hak Sim in China.”

“Oh, hi. How have you been? Did they start playing the movie?”

“We have just finished counting the movie production cost taken by the movie production company. The movie will start showing everywhere in China starting next Monday.”

“So, can I expect to see money coming in?”

“We should have taken the role as an investment company for the movie production. Since all happened in China, we couldn’t do it. It’s a shame.”

“We have Huanle Shiji Production Company.”

“Huanle Shiji Production Company is a movie production company. Technically, it’s not an investment company. We didn’t have people or connections here in China to establish an investment company, so it’s like Huanle Shiji Production Company is doing the dual role of a movie production company and also an investment company.”

“It doesn’t matter which company is an investment company, does it? We just need to make money. So, when can I expect to see money coming in?”

“We will have to wait another two or three months after the movie finishes its run. We will then calculate the money that we made from the movie.”

“Hmm, that’s kind of slow.”

“Once a movie starts showing, the movie theaters that show the movie takes 50% of the earnings after deducting movie development support funds and taxes. The movie distributor—Yang Guang Pictures—which we made the movie distribution contract with takes 10% as their fees, and the investment company takes 60% of the profits while the movie production company takes the other 40% of the profits.”

“Hmm.”

“If the movie becomes a box office hit, we will see substantial profits. In fact, the major investor of this movie production is you, sir. So, once profits generate, most of them will go into your bank account, sir.”

“Mori Aikko won’t receive any additional money, will she?”

“Actors, actresses, and the screenwriter are already paid for their work, sir. We are not paying any additional amount of money to them. The pay for these people is included in the movie production cost.”

“Hmm, I see.”

“Sir, I think I should stay here longer even though the movie production is over. I will make sure that you receive your investment return.”

“Sounds good.”

“I understand that if I stay here longer, it will cost you, sir. And, I feel sorry about that.”

“It’s fine. I want you to stay there to watch the investment return.”

“Yes, sir.”

After getting off the phone with Director Woon-Hak Sim, Gun-Ho made a call to GH Media’s President Jeong-Sook Shin asking her to come to his office. After a moment, President Jeong-Soo Shin, who was working on the 17th floor in the same building as Gun-Ho, showed up in Gun-Ho’s office on the 18th floor.

“Last time you came to my office to have a cup of tea with me, and I had to let you go without having a tea at that time. I want to make it up to you today. I have plenty of spare time today.”

“Haha. Thank you.”

Gun-Ho called for Secretary Yeon-Soo Oh and asked her to bring two cups of Longjing tea. When Secretary Yeon-Soo Oh was about to leave the office to bring tea, President Shin said to her, “I’d like to have a cup of black tea instead of Longjing tea, please.”

Gun-Ho smiled and said to President Shin, “I thought you liked Longjing tea.”

“Oh, umm, for me, Longjing tea is too mild…”

“It has been a while since we had a cup of tea together.”

“You have been so busy lately, sir. I was waiting for your call to have a cup of tea.”

“Haha, really?”

“As a matter of fact, I wanted to visit your office last week, but I knew you would be very busy because of Dyeon Korea’s stock matters. Someone actually asked me about it the other day. He asked what I think would happen to Dyeon Korea’s stock price.”

“Why is he asking you about Dyeon Korea’s stock?”

“I believe that he thought that I might have some inside information about Dyeon Korea since I am close to you, sir. I told him that I have no idea at all.”

“I don’t recommend investing in the stock market ever.”

“When I checked Dyeon Korea’s stock price this morning, it dropped to 25,000 won. And, when I saw Dyeon Korea’s market capitalization on Naver.com, I was startled.”

“Why were you startled?”

“Oh my, Dyeon Korea’s market capitalization is 650 billion won.”

“That sounds about right. The total number of issued stock is 26 million, and the current stock price per share is 25,000 won, so that’s about right.”

“Since it is a joint venture company, you own half of it, right? That means that your portion is more than 300 billion won. Oh my goodness!”

“Well, we need to take into account the shares that we offered to the public and also those that went to our employees per Employee Stock Ownership Program. So, my portion won’t be that much. By the way, the movie will start showing in China next week, but we won’t see money coming in until next year. Will it be okay with you?”

“I’m aware of it, sir. It doesn’t matter whether I receive money this year or next year as long as I get it.”

“I believe it would be around Springtime.”

“I suppose so.”

Gun-Ho was drinking a cup of Longjing tea while President Shin was enjoying a black tea.

“What is going to happen to Director Woon-Hak Sim then? Is he coming back to Korea anytime soon?”

“I told him to stay there longer to make sure we collect our investment return. Why are you asking about him, President Shin? Is it about his wage and expenses?”

“It is true that GH Media is paying his wage, but it’s not high enough to make me concerned.”

“Are you concerned about the amount of your dividend? You think it could get reduced because of his prolonged stay in China?”

“Haha. Not at all, sir. GH Media’s sales revenue has increased this year compared to last year. But, because of the investment that we made in the movie production and also the TV series production, we could make good deductions with some expenses like wages and travel expenses. So, our net income after tax this year will be similar to the one last year.”

“That means that the number of dividends to the shareholders will be about the same as well.”

“I believe so, sir.”

“How much did I receive last year from GH Media for my dividend?”

“It was 1.14 billion won, sir.”

“Oh, that’s right. That’s the amount that I received last year. So, I can expect to receive about the same amount this year too, right?”

“Yes, sir.”

It occurred to Gun-Ho that even though GH Media was a small company, it was lucrative as well. He had received his dividends from GH Media three years in a row, and he was very pleased with the fact.

On the other hand, President Jeong-Sook Shin was feeling sorry for Gun-Ho. She knew that she didn’t have to compete with other companies that Gun-Ho owned, but she couldn’t just ignore the fact that Gun-Ho’s other companies such as GH Mobile and Dyeon Korea would bring way more money to Gun-Ho. They were big companies generating 100 billion won per year after all. What she brought to Gun-Ho with GH Media looked so small compared to those other GH companies.

President Shin said as she was taking a sip of her tea, “Umm, sir, once we receive earnings from the movie production next year, how do we account for them? My staff in the accounting team is asking about it.”

“Once you receive the earnings, you classify the amount that is the same as our initial investment fund as a retrieval of our investment fund, and the remaining amount of funds need to be classified as investment profits.”

“Oh, so we should divide the earnings into two.”

“That’s right. That will make the accounting work more convenient.”

“Haha. It’s easy enough. You just resolved the issue that my accounting staff, and I have been trying to figure out for a long time. Thank you, sir.”