CHA Biotech is facing a triple whammy of losses, a share price slump, and duplicate listings.
CHA Biotech posted a 30 billion won loss in the first quarter of this year. Its share price has fallen more than 30% over the past three months. It must list its subsidiary CHA Healthcare by 2027, but concerns are mounting over the government's duplicate listings regulation.
◇ A tailwind for the market, but CHA Biotech's shares fall
CHA Biotech said on the 20th that first-quarter consolidation sales came to 329.7 billion won this year. Sales rose 8% from a year earlier. The operating loss widened to 30.7 billion won from 12.5 billion won a year earlier. Research and development expenses were about 6 billion won, accounting for 2% of total sales.
Last year, CHA Biotech acquired Kakao Healthcare through subsidiaries CHA Cares and others. A company official said, "Sales increased due to the effect of Kakao Healthcare consolidation," and noted, "Expense was incurred as we expanded the Digital Healthcare business." CHA Biotech aims to combine medicine and IT so that patients can manage their health outside hospitals.
Amid this, the share price is falling. CHA Biotech closed at 21,150 won on Feb. 19 this year and ended at 13,930 won on the 19th. Unlike funds flowing into the market on a semiconductor tailwind, CHA Biotech's share price fell 34% over the past three months. Analysts said weak first-quarter results and higher interest rates, which dampened overall investor sentiment for biotech stocks, weighed on the shares.
◇ Regulations banning "duplicate listings" leave CHA Healthcare's IPO cornered
CHA Biotech is required to list its subsidiary CHA Healthcare by Dec. 2027. In Dec. 2024, CHA Biotech issued exchangeable bonds (EB) backed by CHA Healthcare shares as the underlying asset. STIC Investments joined as an investor, and they agreed to list CHA Healthcare by 2027.
At the time, they discussed pursuing an initial public offering (IPO) after merging CHA Healthcare and CHA Cares. CHA Healthcare operates hospitals in seven countries including the United States and Australia, and CHA Cares manages medical facility infrastructure. The lead underwriters are Daishin Securities and Shinhan Investment & Securities. A company official said, "It has not been decided whether to list on KOSPI or KOSDAQ."
As of the end of last year, CHA Biotech held 75.3% equity in CHA Healthcare. Since CHA Biotech is already listed on KOSDAQ, taking CHA Healthcare public as well could spark controversy over duplicate listings. Earlier, the Financial Services Commission and the Korea Exchange (KRX) said they would in principle ban duplicate listings of parent companies and subsidiaries, allowing them only in exceptional cases. The aim was to prevent simultaneous listings from eroding the value of parent company shares and harming shareholders.
In response, CHA Biotech decided to sell 7,692,308 shares of CHA Healthcare to Pium Investment (Pium AI Future Healthcare Fund) on the 30th of next month for 200 billion won. The sale price is 26,000 won per share. If completed, CHA Biotech's equity in CHA Healthcare will fall to 49.13%.
Industry watchers say CHA Biotech may have transferred equity to ease controversy over duplicate listings. A CHA Biotech official said, "We decided to dispose of shares to restructure CHA Healthcare's investor base," adding, "We are reviewing our approach in line with financial authorities' duplicate listings policy."