Although the domestic stock price index has risen significantly, the stock price of Celltrion listed on the securities market has remained within a boxed range, causing its market capitalization rank to fall outside the top 10. In particular, Celltrion has announced seven rounds of share buybacks this year alone to support the stock price, but these have not had a significant impact on the stock price.
As Celltrion appeared to be sidelined in this unusual uptrend, minority shareholders are threatening collective action and turning their frustrations toward Chairman Seo Jeong-jin's family. They are rallying around the idea that the low stock price of Celltrion is due to the succession plan.
On the 30th, Celltrion's stock price closed at 159,600 won (based on regular trading hours). While the KOSPI index has risen over 10% this month, Celltrion has fluctuated around the 160,000 won mark. Looking back over the past six months, while the KOSPI index has increased by 28%, Celltrion's stock price has actually fallen by 11%.
Although the bio sector generally shows weakness, considering that Celltrion has purchased about 650 billion won worth of its own shares seven times this year under the pretext of boosting its stock price, the company's poor stock performance is particularly striking.
Minority shareholders are attributing the poor stock performance to the succession issues of Chairman Seo Jeong-jin's family. The atmosphere is intensifying as the chairman recently mentioned succession in an official setting.
During a press conference in May, Chairman Seo noted, 'In case of my demise, half of the company will go to the state and half to the second generation,' expressing concerns about the excessive gift tax while indirectly revealing the succession plan. Regarding the ongoing share buyback, he stated, 'It's not solely for stock price defense,' asserting that 'the gift tax is something I will have to pay anyway, and increasing my ownership share is a method for ensuring that the second-generation owners can manage the company stably.'
Previously, Chairman Seo stated at a press conference two years ago, 'There is no connection between the acquisition of treasury shares and succession,' adding, 'I have to pay several trillion won in gift taxes, so there is no way to succeed. I never expected the company to succeed, so I didn't prepare for succession.' It is presumed that there has been a significant change in attitude regarding succession and inheritance over the past two years.
At the pinnacle of Celltrion Group's governance structure is Chairman Seo. He holds 98.1% of the equity in Celltrion Holdings, a non-listed company, which is the largest shareholder, owning 22.9% of Celltrion shares.
If Chairman Seo were to pass on management rights to his children, the equity in Celltrion Holdings is crucial, and the value of this non-listed company's equity is assessed based on the value of its assets. This is where minority shareholders associate Celltrion's low stock price with the succession issue.
Although it was previously canceled due to opposition from many shareholders, the possibility of Celltrion pushing for a merger with Celltrion Pharm remains a burden for shareholders. In 2023, Celltrion merged with Celltrion Healthcare and initiated a merger with Celltrion Pharm last year. However, opposition from Celltrion shareholders regarding the merger ratio between Celltrion and Celltrion Pharm led to the merger being canceled.
In the securities industry, the effects of the merger between Celltrion and Celltrion Healthcare have yet to be seen. The recently announced consolidated performance figures for Celltrion for the 2024 fiscal year were the first indicators showing the effects of the merger between Celltrion and Celltrion Healthcare. While Celltrion's revenue last year was 3.55 trillion won, a 63% increase from the previous year, operating profit fell to 492 billion won, a 24% decrease from the previous year.
Korea Investment & Securities researchers noted, 'The reason for the lower-than-expected operating profit is due to selling and administrative expenses,' adding, 'We expected selling and administrative expenses to decrease after the merger effect removed the purchase price allocation amortization cost, but they did not decrease as expected due to increased research and development expenses.'