Kospi halts trading of Samsung Engineering

The Korea Exchange (KRX) prohibited trading of Samsung Engineering shares in the stock market on Monday following the company’s announcement that its capital impairment ratio was over Kospi’s cut-off line.

The KRX prohibited trading of Samsung stocks in the Kospi market until March 30 as the company’s ratio of capital impairment hit 156.5 percent as of December last year, which is about three times higher than the market’s cut-off line of 50 percent.

A company becomes a subject of trading probation when either the capital impairment ratio hits over 50 percent or more or it earns less than 5 billion won in revenue. The trading probation went into effect at 5:39 p.m. on Monday and can’t be resumed until the company submits proof it has resolved the problem.

The KRX’s ban came after the company posted last year’s earnings. The company said it made 1.45 trillion won ($1.1 billion) of operating loss, turned to the red from last year’s 161.8 billion won of profit. The revenue also dropped by 27.7 percent year-on-year to 6.44 trillion won.

The company said last year’s loss was heavily impacted by the 1.4 trillion won in losses in the third quarter from difficulties in key markets including the Middle East that were influenced by the low international oil price trend.

The company said it turned to profit in the fourth quarter as its revenue increased by 129.8 percent from a year ago to 1.96 trillion won. It also made 21.9 billion won in operating profit in that quarter.

“We successfully increased about 1.26 trillion won of capital by issuing new stocks recently, meaning that we are completely out of the capital impairment as of February,” the company said in a statement.

“As the KRX requested, we will soon submit documents that can show that we are financially healthy so our shareholders can resume trading.”

BY KWON SANG-SOO [kwon.sangsoo@joongang.co.kr]