Kumyang, which received an 'opinion rejection' in its 2024 audit report, is now facing delisting risk as it also received negative feedback on its semi-annual report (January to June). Compounding the issue, Kumyang's 40.5 billion won capital increase plan has been postponed by about one month, with several corrections to disclosures related to new investments and fundraising.
According to the Financial Supervisory Service's electronic disclosure system on the 22nd, Kumyang disclosed on the 14th that it received a 'rejection of opinion' from its auditor regarding the semi-annual review. While this rejection does not immediately lead to issues with listing qualifications, it can be interpreted as evidence that the company's management situation is not favorable.
The external auditor, Shinhan Accounting Corporation, assessed that there is significant uncertainty regarding Kumyang's ability to continue as a going concern. Kumyang reported an operating loss of 25.478 billion won and a net loss of 35.547 billion won in the first half of the year. Furthermore, as of the end of the first half, its current liabilities exceeded current assets by 626.046 billion won.
With losses continuing and the burden of liabilities increasing, it is critical for Kumyang to attract new investments; however, even this is getting delayed.
Skyve Trading & Investment, a Saudi Arabian corporation that had agreed to participate in Kumyang's 40.5 billion won third-party capital increase, postponed the payment date from the 2nd of this month to September 3rd.
Skyve Trading & Investment has faced market criticism for being unclear since Kumyang disclosed it as the underwriter for the capital increase back in June. This is due to the fact that it is a newly established corporation founded in March of this year and it only has a capital of 100 million won.
Kumyang has made several revisions to other business-related disclosures during the first half of the year. It publicly announced in April that it had contracted with the U.S. battery corporation Nanotech Energy to supply '21700 secondary batteries', but recently changed the supply date to April 2026.
Kumyang has also postponed the payment date for the remaining capital of its Phase 3 Congo lithium mine project, which it began developing in 2022, from July 11 of this year to the end of the year. Delays have also occurred in the completion of the Busan Gijang factory, extending the timeline for new facility investments from mid-year to 2026.
Shinhan Accounting Corporation noted, 'Whether Kumyang can continue as a going concern contains significant uncertainty that depends on the execution of agreements for future fundraising and the results of management performance improvements. However, we could not secure evidence to reasonably estimate corrections to assets, liabilities, and related profit and loss items that could arise as a result of these uncertainties.'
Kumyang stated it will communicate and negotiate with its auditors to provide audit evidence and resolve the reasons for the opinion rejection. It further mentioned that it aims to address the points raised during future audits to derive appropriate opinions.