"Desperate to Avoid Delisting"... ENEX Struggles with Reverse Stock Split

President Lee’s “Clean Up Poor Products in the Department Store” Remark Spurs Action
Reverse Stock Split from 500 to 2,500 Won Fails to Avert Delisting Risk
Market Cap Must Reach 50 Billion Won by 2027… Prospects for Turnaround Remain Gloomy

ENEX has decided to proceed with a reverse stock split as it stands at a crossroads regarding potential delisting. This move comes just three weeks after the Financial Services Commission (FSC) introduced strong delisting reform measures to expel underperforming companies, following President Lee Jaemyung’s remarks on the need to “clean up poorly performing listed companies.” However, since the government has already declared it would block attempts to evade delisting through reverse stock splits, and with the requirements for KOSPI delisting being further tightened, the outlook remains uncertain.

According to industry sources on March 10, ENEX announced through a regulatory filing on March 5 that it had decided on a 5-to-1 reverse stock split. The par value per share will be adjusted from 500 won to 2,500 won, and the total number of issued common shares will be reduced from 59,991,641 to 11,998,328. If approved at the shareholders’ meeting scheduled for March 26, trading of the stock will be suspended for about a month from April 24 to May 19. Trading will resume at the adjusted par value on May 20. ENEX stated that the purpose of the stock consolidation is to “maintain an appropriate number of circulating shares.” However, this is seen as a strategy to shed its “penny stock” label and move above the par value threshold to avoid delisting.

Recently, the government has accelerated efforts to expel underperforming listed companies. The momentum began in January when President Lee Jaemyung compared the stock exchange to a department store on his X (formerly Twitter) account, emphasizing that products with no value should be thoroughly removed and that good new products should be introduced quickly. The intention is to create a market structure centered on strong companies in order to enhance confidence in the securities market.

In line with this, the FSC announced “Delisting Reform Measures for Swift and Strict Expulsion of Underperforming Companies” last month. Notably, starting in July, a new “penny stock criterion” will be introduced, under which stocks trading below 1,000 won will be subject to delisting. In addition, the market capitalization threshold for delisting, originally set to be applied from January 2027 at 30 billion won, will be moved forward to July this year. As of the closing price on March 9, ENEX’s share price was 449 won and its market capitalization stood at 26.9 billion won. The share price needs to reach at least 501 won for the market cap to hit the 30 billion won threshold. In other words, the company is facing an urgent situation.

To prevent companies from evading delisting by simply increasing par value through reverse stock splits, the government has included in its new requirements that “stocks trading below par value even after a reverse stock split” will still be subject to delisting. Thus, even if ENEX adjusts its par value from 500 won to 2,500 won, if the stock price remains below that level, it will still face delisting. Additionally, the government announced plans to tighten detailed criteria and market monitoring to prevent temporary price inflations aimed at dodging delisting.

The problem is that it will be difficult for ENEX to turn its performance around, given the continued slump in the construction and furniture industries. In 2025, ENEX posted consolidated provisional sales of 215.2 billion won and operating profit of 500 million won. Sales fell by 18.5% year-on-year, and operating profit plummeted by 89.3%. On top of this, the company was recently fined 5.8 billion won by the Fair Trade Commission for collusion in built-in furniture bids—an amount that exceeds its 2024 operating profit of 5.1 billion won, which is a significant blow.

Even if ENEX survives this year, the outlook for next year is even bleaker. Starting in January 2027, the market capitalization threshold for delisting will be raised to 50 billion won. To escape the risk of expulsion, ENEX’s share price would need to surge by about 85.7% from its current level to reach 834 won. ENEX has been listed on the KOSPI market since July 1995.

This content was produced with the assistance of AI translation services.