Table of Contents
- Geumyang Faces Delisting Crisis, Standing at a Crossroads
- Disclaimer of Audit Opinion and Trading Suspension: The Prelude to Crisis
- Construction Halt of Gijang Secondary Battery Factory: Sunk Future Momentum
- Shaking Secondary Battery-Related Stocks: Financial Deterioration and Loss of Trust
- Uncertain Future and Investment Cautions
Geumyang Faces Delisting Crisis, Standing at a Crossroads
Geumyang Co., Ltd. (KOSPI: 001570) is a specialized chemical materials company founded in 1955, focusing on the blowing agent business. However, entering the 2020s, it has attracted attention by challenging new fields such as the development of secondary battery materials and overseas resource development.
In the past, the stock price soared, exceeding a market capitalization of 10 trillion won, but it currently faces a serious crisis, including the possibility of delisting. This situation began when an external auditor issued a 'disclaimer of opinion' on the financial statements for the fiscal year 2024.
As a result, trading of Geumyang's stock has been suspended, and investor concerns are growing. As uncertainty in the financial markets increases, interest in this company is expected to rise in the future.
Disclaimer of Audit Opinion and Trading Suspension: The Prelude to Crisis
The main cause of Geumyang's crisis stems from the disclaimer of opinion issued by the external audit firm Hanul Accounting on the 2024 fiscal year financial statements.
The key issue with the disclaimer of opinion is the serious uncertainty regarding its viability as a going concern. This uncertainty arises from a combination of large operating losses, a high debt ratio, severe liquidity issues, and uncertainties in financing plans for new business.
This situation poses a significant threat to the company's future growth.
Refusal of the auditor's opinion is classified as grounds for delisting by the Korea Exchange. As a result, trading of Geumyang’s stock was immediately suspended. The company submitted an objection to the delisting, but market reactions have been very negative.
Construction Halt of Gijang Secondary Battery Factory: Sunk Future Momentum
The halt of construction of the secondary battery factory planned by Geumyang in Gijang is revealing the company's serious crisis. This factory was named 'Dream Factory 2' and was planned to produce cylindrical battery cells in 21700 and 4695 formats at a large scale. However, construction has stopped due to non-payment to the contractor. This situation can be seen as a result of the anticipated shortage of funds for construction due to the failure of a large-scale capital increase plan.
The suspension of operations at the Gijang factory reveals that Geumyang's secondary battery business strategy has exceeded financial constraints, significantly impacting future growth momentum. Currently, the completion and restart of the factory have emerged as crucial tasks directly related to the company's survival.
To overcome this situation, Geumyang has submitted an objection. In a recent regular shareholders' meeting, the company announced plans to secure necessary funds through selling and leasing back the secondary battery factory located in Jang-an-eup, Gijang-gun.
Shaking Secondary Battery-Related Stocks: Financial Deterioration and Loss of Trust
Geumyang, once highlighted as a secondary battery-related stock, is raising alerts among investors regarding its recent situation.
The company's financial condition has deteriorated significantly. Starting from 2023, operating losses are predicted to increase to 560 billion won in 2024, leading to a net loss of a staggering 1.861 trillion won. In addition to these financial issues, the current situation is compounded by current liabilities significantly exceeding current assets, resulting in a severe liquidity crisis.
This case illustrates the need for caution when investing in related stocks.
Concerns have been raised regarding the excessive initial projections for investment in lithium mines in Mongolia. This has led to classification as a non-compliant disclosure issue, along with investigations by customs, resulting in severe damage to trustworthiness.
The likelihood of Geumyang facing delisting and trading suspension emphasizes the importance of thoroughly analyzing a company's financial health, operational capability, and transparency when investing in secondary battery-related stocks. This situation serves as a significant lesson for investors.
Uncertain Future and Investment Cautions
Currently, Geumyang is facing a serious crisis of potential delisting. The outcome of the objection review by the Korea Exchange will play a significant role in the company's future. Even if an improvement period is granted, overcoming financial difficulties, normalizing suspended business operations, and regaining market trust will be an extremely challenging endeavor.
Various issues, including the halt of the Gijang factory construction, sluggish overseas resource development projects and controversies, continuous losses, liquidity problems, and legal risks, are troubling Geumyang. Without resolving these issues, it appears challenging to improve the situation.
Although expectations for secondary batteries were high in the past, Geumyang is currently facing a severe crisis. This situation puts investors at risk of a total loss of principal. Therefore, it is essential to closely monitor future announcements from the exchange regarding decisions, funding, restructuring news, and the results of customs investigations while approaching the situation cautiously. Thorough analysis and judgment are important in this context.
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