Hyungji Group is facing challenges as all three of its listed companies have been designated as management items. This includes Hyungji Elite (KOSPI), Hyungji Global (KOSDAQ), and Hyungji I&C (KOSDAQ), all of which are managed by the children of Chairman Choi Byung-o, raising concerns about the performance of the second-generation leadership.
According to the Korea Exchange on August 18, the three listed companies within Hyungji Group were consecutively designated as management items this month. Hyungji Elite and Hyungji Global, led by Vice Chairman Choi Jun-ho, were designated on August 13 due to falling stock prices and market capitalization. Hyungji I&C, represented by Chairman Choi's daughter, Choi Hye-won, also announced its designation on August 3.
Hyungji I&C's performance has been particularly poor. Over the past month, its stock price return has plummeted by 55.71%, ranking it among the bottom three KOSDAQ-listed companies. The lowest performer was Syswork, which has entered liquidation, followed by Kolon TissueGene. Given that Kolon TissueGene's stock price is at 28,550 won, Hyungji I&C's price of 881 won indicates a severe decline.
Hyungji I&C was designated as a management item after its market capitalization failed to exceed 20 billion won over the past 30 trading days, with its market cap at around 6.7 billion won at that time. Following the announcement of its designation, the stock price, which had been above 1,000 won at the end of last month, fell to the 900 won range and then to the 800 won range. If this trend continues, there are concerns that additional reasons for management item designation may arise next month.
Poor financial performance is also a burden. Hyungji I&C's consolidated operating profit is projected to turn into a loss of 5 billion won in 2024, down from a profit of 6.5 billion won in 2023, with losses expected to widen to around 7 billion won in 2025. In April, the company executed a capital reduction of 38,666,360 shares to improve its financial structure, but the stock price fell from 4,734 won immediately after trading resumed to 3,745 won, eventually dropping to the 2,000 won range. In July, the company conducted a rights offering of 2.8 million shares to secure operating funds, but this was insufficient to significantly boost the stock price. However, there are signs of improvement, as second-quarter sales increased by 2% year-on-year, and operating profit showed a slight turnaround.
The situations of Hyungji Elite and Hyungji Global are not much different. During the same period, Hyungji Elite's stock price fluctuated between the 700 won and 300 won ranges, failing to escape the penny stock category, while Hyungji Global also traded between 600 won and 300 won, continuing its weak performance. Notably, on August 12, the day the management item designation was announced, both stocks closed at 403 won and 412 won, respectively. Hyungji Elite is set to complete a 5-for-1 stock consolidation on October 5, a move interpreted as a response to the delisting criteria due to low stock prices.
Market sentiment is increasingly concerned about the management capabilities of the second-generation leadership at Hyungji Group, as the designation of all three listed companies as management items raises questions. A securities industry official noted, "The key variable determining whether these companies will face delisting will be how quickly they can improve their stock prices and market capitalization through better performance."
* This article has been translated by AI.
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