[News Space=Reporter seungwon lee] Cleantopia (CEO Kim Sang-young), the number one company in the laundry industry, has achieved the best performance since its establishment. It has achieved rapid growth of about three times in sales and profits compared to the previous year. It is known that interested buyers have already made related proposals to JKL Partners, the largest shareholder.

According to the audit report of the Financial Supervisory Service's electronic disclosure system on the 2nd, Cleantopia's sales in 2024 increased by a whopping 190%, nearly three times, to KRW 279.7 billion compared to KRW 96.5 billion the previous year. 

Operating profit increased 161% to KRW 31.1 billion from KRW 11.9 billion the previous year. Net income also increased 171% to KRW 24.4 billion from KRW 9 billion the previous year. The operating profit ratio is expected to gradually decrease to 13.3% in 2022, 12.3% in 2023, and 11.1% in 2024.

Cleantopia has increased sales by raising prices every year after maintaining customer lock-in. However, the analysis is that the profit margin has decreased as the cost of sales has also increased along with the cost of production.

The reason for this record-breaking performance is the explosive growth of the laundry business, which accounts for 89.4% (KRW 250.1 billion) of total sales.

Looking at the sales details in detail, following laundry sales, merchandise sales were 21.3 billion won, service sales were 7.1 billion won, and product sales were 1.1 billion won. The cost of sales due to the change in the price of major raw materials also increased by 271% year-on-year to 215.5 billion won.

Sales and administrative expenses amounted to 33.1 billion won, of which 12.3 billion won was used for salary items, 4.6 billion won for sales promotion expenses, 3.9 billion won for commissions, 1.4 billion won for advertising and publicity expenses, and 1.3 billion won for sales commissions.

A Cleantopia official explained, "We achieved sales and profit growth through innovation in our business structure, thorough cost improvement, expansion of new customer-centered services, and securing additional hotel and corporate customers." He added, "In particular, the stabilization of new businesses such as late-night pickup and delivery services through consumer apps, clothing storage services, and moving cleaning and home care played a major role."

However, the debt ratio rose to 61.8%, up from 49.2% the previous year. In the case of Cleantopia, current assets are 32 billion won among current assets, and current liabilities are 22.4 billion won. Even after paying off current liabilities (22.4 billion won), Cleantopia still has about 9.6 billion won in current assets left. 

Current assets are largely composed of cash and cash equivalents (KRW 21.8 billion), accounts receivable (KRW 8.2 billion), and other short-term assets, while current liabilities (KRW 22.4 billion) are composed of accounts payable (KRW 1 billion), accounts payable (KRW 12.8 billion), and current income tax liabilities.

The current ratio, which is an indicator of the company's short-term financial soundness, was 166%. This is expressed as a percentage of how much current assets (assets that can be converted to cash in the short term) are greater than current liabilities (debts that must be repaid within one year). In other words, it means that the company has current assets equivalent to 1.66 times the amount needed to repay short-term debt.

Cleantopia currently holds sufficient assets to repay short-term debt, demonstrating the company's sound financial health and liquidity management.

In addition, there is a long-term loan of KRW 2.3 billion to its affiliate Cleantopia Stay Co., Ltd., and an external guarantee (Cleantopia franchisees, etc.) of KRW 1.23 billion (64%↓ compared to KRW 3.4 billion in the previous quarter).

However, legal disputes are also ongoing. The lawsuit filed by the care center for violation of the ban on concurrent employment is currently pending in the Seoul High Court.

In addition, the dividend was increased by 329%, more than four times from 7 billion won the previous year to 30 billion won. The entire dividend is taken by Casablanca Limited.

The dividend payout ratio was 123%, which shows that dividends (KRW 30 billion) were greater than net profit (KRW 24.4 billion). 

The assessed land value based on the publicly announced price of the real estate owned amounts to 23.3 billion won (book value 23.6 billion won).

A distribution industry insider explained, "The vertical integration strategy of the laundry industry has been sufficiently successful, and the logistics system and network of approximately 3,200 franchise stores will be attractive to companies that need to expand their lifestyle services." He added, "Last year, they showed their best performance ever, and now that it is entering its fifth year since the acquisition, it is time to send it on its way."

In other words, since the company has good performance and high marketability, the explanation is that private equity fund (PEF) operator JKL Partners will soon put the company up for sale through mergers and acquisitions (M&A) to recover cash.

In response to this, a Cleantopia official avoided giving a direct answer, saying, "Currently, it is difficult to talk about Cleantopia's investor-related matters, especially the sale of shares, as they are the exclusive rights and decisions of the shareholders."

However, it has been reported that investment firms including domestic and foreign private equity funds, along with foreign IBs such as UBS and Citi Global Markets Securities, are already making related proposals to the largest shareholder, JKL Partners. As there are many potential buyers seeking to acquire Cleantopia in the M&A market, JKL Partners plans to review the proposals, meet them in person, and negotiate individual sales, and is expected to decide on a preferred negotiating partner in the second half of this year.

In 2021, the private equity fund JKL Partners acquired 100% of the shares of Chairman Lee Beom-taek, the largest shareholder of Cleantopia, and his special affiliates for KRW 190 billion. After the acquisition, JKL Partners announced its goal of achieving KRW 1 trillion in sales and KRW 150 billion in EBITDA by 2030, driven by the increase in single-person households and the expansion of special laundry services.

In the domestic laundry industry, World Cleaning, Clean With, Winia 24 Clean Shop, Clean Up 24, Clean Aid, and Washteria are operating.

Meanwhile, Cleantopia was established on December 19, 1997 and is engaged in laundry processing, laundry convenience franchise, manufacturing and wholesale of laundry equipment, and is located in Sangdaewon-dong, Jungwon-gu, Seongnam-si, Gyeonggi-do. Its current capital is 2.168 billion won (216,780 shares of common stock), and Casablanca Limited owns a 100% stake.

After graduating from Hanyang University’s Department of Textile Engineering, Chairman Lee Beom-taek, the founder of Cleantopia, worked at Lucky before establishing Bogo Industries (a dyeing and textile processing company) in 1986 and establishing the Cleantopia division in 1992. After the IMF, his younger brother Lee Beom-don left KEPCO and joined the company, transforming it into a 500 won strategy laundry company and growing significantly.