Wonpung Mulsan(008290) is expected to become the first corporation to be delisted from the KOSDAQ market for failing to exceed a market capitalization of 20 billion won. With corporations lined up to enter delisting procedures one after another, there are cautions that investors should watch for sharp drops in the stock prices of the relevant issues.
According to the financial investment industry on the 9th, Wonpung Mulsan will begin delisting procedures from the KOSDAQ market starting today. Wonpung Mulsan was designated as an issue under watch after its market capitalization remained below 20 billion won for 30 consecutive trading days on July 3. Delisting was decided after it failed to meet the 20 billion won market cap threshold for at least 45 trading days thereafter. Wonpung Mulsan is scheduled to be delisted after a seven-trading-day liquidation trading period.
Earlier, the Financial Services Commission announced in Feb. the "delisting reform plan for the swift and strict exit of insolvent corporations." Accordingly, from July, KOSDAQ-listed companies whose market capitalization stays below 20 billion won for 30 consecutive trading days are designated as issues under watch. If they fail to meet the 20 billion won market cap threshold for at least 45 trading days out of 90 trading days thereafter, delisting procedures begin.
Ahead of delisting, the stock price also plunged. Wonpung Mulsan's stock, which was 758 won on the 1st, continued to fall and hit the lower limit (the lowest bound of the daily price limit) for two straight days on the 4th and 5th, dropping below 300 won.
Starting with Wonpung Mulsan, KOSDAQ corporations that are close to meeting the delisting criteria are lined up, requiring investor caution. Once delisting is decided, shares can no longer be traded on the regular market, making it difficult to buy or sell at appropriate prices. In fact, KM Pharmaceutical (-29.58%) and Silla SG (-26.42%) plunged on the day.
As of the 8th, KM Pharmaceutical(225430) and Silla SG(025870) will enter delisting procedures if they fail to meet the 20 billion won market cap threshold for five consecutive trading days, GOLD&S(035290) and Soosung Webtoon(084180) for seven consecutive trading days, and A.F.W(312610) for 10 consecutive trading days.
Of course, these corporations can avoid delisting if their stock prices surge and meet the market cap threshold. However, based on the closing prices on the 8th, the market capitalizations of GOLD&S (5.4 billion won), Soosung Webtoon (8.8 billion won), A.F.W (5.2 billion won), KM Pharmaceutical (4.2 billion won), and Silla SG (4.4 billion won) are far short of 20 billion won, making it unlikely they will meet the standard in the short term.
However, as a path has opened to transfer list to the KONEX market after delisting, some corporations may avoid exit. At the market situation review meeting on the 4th, as part of measures to supplement the KOSDAQ delisting system, a plan was proposed to allow certain corporations that meet specified requirements to transfer list to KONEX among those being delisted for failing to meet the market cap requirement that was raised from July.
Specifically, eligible targets are corporations that are not in capital impairment and either posted operating profit in two of the last three fiscal years, or posted operating profit in one of the last three fiscal years while having shareholders' equity of at least 20 billion won.
Under this standard, Silla SG is mentioned as likely to transfer list to the KONEX market, as it recorded operating profit in two of the last three fiscal years. However, as the listing rule amendment for KONEX transfer listings is scheduled to take effect on the 23rd, it needs to be confirmed whether the rule will be applied retroactively to existing issues under watch and corporations subject to delisting.