In a letter dated Tuesday, Flashlight Capital Partners urged Japan's Secom Co. to increase its stakes in two key affiliates - South Korea's S-1 Corp. and Taiwan Secom Co. - to at least 50%, effectively doubling its holdings. Per Bloomberg data, Secom's existing stakes are 25.65% in S-1 and 26.75% in Taiwan Secom. Flashlight says moving those stakes to 50% or more could lift Secom's sales outside Japan to about 28%. By comparison, Secom has set a 10% overseas sales target by March 2028, up from 5.4% now.
Flashlight is keeping up the pressure after an earlier offer to buy an S-1 stake was turned down. It has involved another party and again urged Samsung Group affiliates to sell their S-1 stake through an open auction, a move it says further probes the limits of South Korea's revised fiduciary duty rules. Last month, Flashlight proposed paying a premium for those S-1 stakes. After the affiliates rejected the bid, Flashlight on Monday called for them to sell through an open auction.
Flashlight argues S-1 is already meaningful relative to Secom's size, with revenue equal to about 24% of Secom's. Under local accounting standards, that revenue is not consolidated because Secom's ownership is below the required threshold. Beyond pushing for bigger ownership, Flashlight is calling for Secom to set tougher goals for growth and profit and to assess if the current leadership team is the right one to execute. In the correspondence, Sanghyun Lee, Flashlight Capital's CEO, wrote, "We believe its share price could re-rate to at least JPY10,000, 55% upside from current levels."
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If Secom moves toward bigger stakes abroad, it would tilt the company's growth story more toward international markets and could change how investors think about its long term prospects. Flashlight's campaign is centered on faster overseas expansion and sharper capital allocation, both of which can be catalysts for a higher valuation if they take hold. The near term hinge is whether Samsung affiliates decide to sell their S-1 shares - and at what price.
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