Woojin Plaimm, with W211.6b in sales, fears delisting — CEO says market cap alone a poor measure

"Every industry has a different business structure and investment model — it is a shame that delisting is decided by a single yardstick called market capitalization. Manufacturing cannot survive without technology investment. You cannot just look at market cap; R&D spending and similar factors need to be considered alongside it."

Woojin Plaimm CEO Kim Ik-hwan made those remarks Wednesday at the company's headquarters in Boeun, North Chungcheong Province, addressing concerns about a potential delisting triggered by tightened market capitalization requirements. Despite posting 211.6 billion won ($156 million) in sales last year and employing 575 staff, the injection-molding machine maker carries a market cap of only around 30 billion won. With the Kospi's minimum market cap threshold for continued listing set to rise to 50 billion won in July next year, boosting corporate value has become an urgent priority.

Woojin Plaimm manufactures injection-molding machines used in plastic product production. Founded in 1985, the company listed on Kosdaq in 2001 before transferring to the Kospi in 2006. It is the largest dedicated injection-molding machine manufacturer in South Korea and holds the top domestic market share. Overseas sales accounted for 32.9 percent of revenue last year.

Behind Kim's frustration with the listing-maintenance criteria lies the front-loaded investment structure inherent to manufacturing. Woojin Plaimm invested 272.7 billion won in factories and equipment over the 13 years from 2013 through last year, with 72.5 billion won committed in the most recent five years alone. "Manufacturing is a structure where you invest in factories and technology first, and the results show up years later," Kim said. "It is hard to judge a technology base and customer relationships built over many years by a share price that changes day to day."

The heavy investment has weighed on profitability. The company recorded consolidated operating profit of 2.9 billion won last year, for an operating margin of 1.4 percent. In the first half of this year, it posted sales of 91.3 billion won and an operating loss of 3.3 billion won. "Since relocating the company to Boeun, we have carried annual depreciation of around 10 billion to 15 billion won for 13 years," Kim said. "Our research center in Austria alone cost more than 7.5 billion won last year. It is regrettable that the market has not given sufficient credit to what we have invested over the long term."

Kim did not lay the blame for the low valuation entirely on the market. "We were so focused on accumulating technology and expanding facilities that we did not pay enough attention to communicating the company's story externally or to raising market capitalization," he said. "We also bear responsibility for not demonstrating sufficient profitability and capital efficiency. We will improve our profit margin and cash flow and show the results in numbers." Woojin Plaimm's return on equity stood at 2.1 percent last year.

Kim views the 50 billion won market cap threshold not merely as a number to clear but as "a warning signal from the market." He said the company's share price is set by the market while earnings are what the company can control. "Our goal is not a one-off response to get above 50 billion won, but to build a company that is recognized as worth far more than that," he said.

The tightened listing requirements have also accelerated the company's management plans. Woojin Plaimm disclosed a corporate value enhancement plan Wednesday, setting targets to raise its return on equity from last year's 2.1 percent to 8.5 percent by 2028 and its price-to-book ratio from 0.35 times to above 1 times. The company plans to pay a dividend of at least 50 won per share annually for the next three years and to buy back and cancel at least 400,000 treasury shares, representing more than 2 percent of shares outstanding. Combined dividends and share cancellations will return more than 2 billion won to shareholders, implying a total shareholder return ratio of at least 5.2 percent based on a market cap of around 38 billion won.

"We had originally planned to pursue share buybacks and cancellations and improve employee compensation in earnest from 2028," Kim said. "The tightening of the listing market cap requirement from July next year moved those plans forward by about a year." He added that the company intends to make the next nine months a period of proving its fundamentals rather than managing its share price. "We will return operating profit to a normal trajectory and generate cash-positive growth by running the factories we have already built harder," he said.

Woojin Plaimm is wrapping up its large-scale capital expenditure program and turning its attention to improving profitability. "Our current production facilities were built with sales of 300 billion won in mind, and that investment is now complete," Kim said. "No major additional facility investment will be needed until sales reach that level."

The company returned to profit in the second quarter, posting sales of 55.8 billion won and operating profit of 800 million won. Woojin Plaimm expects full-year sales to rise by roughly 10 billion to 15 billion won from last year's level, with operating profit also improving year on year. "It is too early to call a recovery on the basis of a single quarter's earnings," Kim said. "We will focus on growing profit and cash together, not just the top line."

The company is also developing its robotics and automation business as a new growth engine. Woojin Plaimm began mass-producing WABOT, an injection-molding machine extraction robot developed over roughly four and a half years, in April. "We see the automation business combining injection-molding machines with robots as a new growth driver," Kim said.

"If we have spent years building the company's technology and production base, it is now equally important to be properly valued by the market," Kim said. "We will raise corporate value so that shareholders do not regret their investment. We will make sure the company is never delisted."