[비즈한국] Sejong Medical is facing the threat of delisting. While the Korea Exchange voted to delist Sejong Medical last June, the company has responded by filing for an injunction to suspend the effectiveness of that decision. Even if Sejong Medical manages to avoid delisting, recovering its stock price to former levels will not be easy. At one point in 2021, Sejong Medical’s stock price exceeded 8,000 won, but on the last trading day before its shares were suspended, it stood at just 412 won.
Sejong Medical is a manufacturer of medical devices such as laparoscopic surgical instruments and was listed on the KOSDAQ market in May 2018. At the time of its listing, Hana Securities offered a positive outlook, stating, "Sejong Medical holds over 100 types of trocars, and since most products are developed for single use, we expect steady demand," adding, "As the global robotic surgery market grows, we also project consistent revenue generation through the supply of single-use and robotic trocars."
However, Sejong Medical’s revenue did not see significant growth. Examining the company's revenue over the last three years: it remained at a similar level each year, with 18 billion won in 2023, 19 billion won in 2024, and 18.5 billion won in 2025. Profitability was neither notably bad nor particularly good. Sejong Medical recorded operating profits of 2.2 billion won and 2.3 billion won in 2023 and 2025, respectively, while recording an operating loss of 500 million won in 2024.
The issue lies in non-operating financial expenses. Sejong Medical’s financial costs (expenses incurred from managing financial liabilities) were 22.6 billion won in 2023, 58 billion won in 2024, and 2 billion won in 2025. As a result, despite generating operating profits, the company recorded net losses of 19.2 billion won in 2023, 65.1 billion won in 2024, and 25.45 million won in 2025. The scale of the net loss significantly decreased by 2025.
Amidst this, Sejong Medical is facing a delisting crisis because its audit opinion for the 2023 business year was disclaimed. Additionally, allegations of embezzlement and breach of trust within the company were included in the substantive examination for listing eligibility. At the time, Jeongjin Serim Accounting Corp., which audited Sejong Medical, explained, "Based on the financial statements presented by Sejong Medical, the accumulated deficit reached 93.5 billion won, and current liabilities exceeded current assets by 77.4 billion won," noting that "this situation indicates the existence of material uncertainty that may cast significant doubt on the company's ability to continue as a going concern."
The Korea Exchange ultimately voted to delist Sejong Medical this June. In response, Sejong Medical filed for an injunction to suspend the delisting decision. The company stated, "We received the delisting decision despite there being no issues with our financial soundness or business sustainability," adding, "We will do our best to protect shareholder interests by responding to the injunction lawsuit and pursuing options such as re-listing or substitute listing, as well as by appointing new director candidates."
It is not as if Sejong Medical has made no self-rescue efforts. Most notably, its debt has been significantly reduced. Sejong Medical’s total liabilities, which reached 98.6 billion won at the end of 2023, decreased to 33.7 billion won by the end of June this year. As a result, in the first half of this year, Sejong Medical recorded revenue of 9.8 billion won, an operating profit of 2.3 billion won, and a net profit of 2.8 billion won due to significantly reduced financial costs. If this trend continues, there is a high possibility of turning a net profit for the year. As of the end of June this year, Sejong Medical's debt-to-equity ratio was 129.65%, which, while not perfectly stable, is not at a dangerously high level.
Furthermore, Sejong Medical has filed a lawsuit for the return of unjust enrichment worth 8.7898 billion won against Genencell founder Kang Se-chan. If the company wins the lawsuit and recovers the funds, it could help improve Sejong Medical's financials. Because the situation is not entirely negative, some observers suggest that Sejong Medical might be able to avoid delisting (Related article: Sejong Medical files lawsuit against Genencell founder Kang Se-chan for return of unjust enrichment).
If Sejong Medical avoids delisting, it appears likely to focus on recovering its stock price. Following news of clinical trial approval for a COVID-19 treatment by Genencell—a company Sejong Medical had invested in—Sejong Medical's stock price once climbed to 8,760 won in October 2021. However, the closing price on March 29, 2024, the last trading day before the stock was suspended, was only 412 won.
Sejong Medical’s minority shareholders believe that Genencell is responsible for the stock price decline. The Sejong Medical Shareholder Solidarity recently submitted a petition for a stern punishment of founder Kang Se-chan and a broker surnamed Yang to the court, arguing that Genencell submitted false clinical trial data for its COVID-19 treatment, which negatively impacted the stock price.
However, even if founder Kang Se-chan is punished and trading of Sejong Medical shares resumes, it will not be easy for the stock price to recover to its previous levels. Sejong Medical is not considered large compared to other listed companies, and there are no particular favorable factors. Even if Sejong Medical's stock price were to rise to 4,000 won, its market capitalization would be 303.1 billion won. A market cap of 303.1 billion won is at a similar level to companies like Korea Information & Communications and Korea Alcohol. However, while those companies recorded revenue of 828.9 billion won and 423.9 billion won respectively last year, Sejong Medical’s revenue last year was only 18.5 billion won.
Sejong Medical is scheduled to hold an extraordinary general meeting of shareholders on October 16. While specific agenda items have not been disclosed, it is reported that it will cover amendments to the articles of incorporation. As the company is a recent focal point of issues, it is expected that discussions regarding the delisting will also take place during the meeting.