[Edaily Reporter KIM EUNG-TAE ] The market capitalization of WOONGJIN THINKBIG CO., LTD.(095720), a leading domestic education company, has reportedly fallen by about half following a stock consolidation. The government introduced new delisting criteria—removing listed companies with a stock price below 1,000 won—to weed out underperforming firms. Although the company carried out a stock consolidation as a defense against delisting, its corporate value actually deteriorated. Critics point out that the stigma effect could intensify, particularly among companies that implement stock consolidations without fundamentally improving their business fundamentals.

According to the Korea Exchange and the education industry on the 6th, WOONGJIN THINKBIG CO., LTD.(095720)’s market capitalization stood at 69.1 billion won as of that day. This represents a 47% decrease from the 131.2 billion won market capitalization recorded on April 23, prior to the stock consolidation.
WOONGJIN THINKBIG CO., LTD. decided on March 11 to conduct a stock consolidation, combining two common shares into one. The new shares resulting from the consolidation took effect on April 28, and with their listing on May 15, the total number of issued shares decreased from 113.65 million to 56.83 million. The company previously explained the rationale behind the stock consolidation, stating, “We are implementing a 2-for-1 stock consolidation to reasonably adjust the number of shares, establish an appropriate share price level commensurate with corporate value, and enhance stock stability.”
Typically, a stock consolidation results in a higher price per share as the number of shares decreases, so corporate value is maintained arithmetically; however, corporate value may fluctuate depending on market assessments or outlooks. Industry observers attribute the sharp decline in WOONGJIN THINKBIG CO., LTD.’s market capitalization following the stock consolidation to prevailing concerns rather than expectations of an improvement in corporate value. There is growing consensus that the stock consolidation—carried out preemptively in anticipation of stricter delisting regulations—paradoxically acted as a “stigma,” labeling the stock as “at risk of delisting” and thereby eroding its corporate value.
Starting in July of this year, financial authorities strengthened delisting requirements by introducing new criteria for “penny stocks” with share prices below 1,000 won. Listed companies whose share price remains below 1,000 won for 30 consecutive trading days are designated as “monitored stocks”; if the price remains below 1,000 won for 45 out of the 90 trading days following such designation, the company is ultimately delisted. In anticipation of this new system, WOONGJIN THINKBIG CO., LTD. proactively carried out a stock consolidation to double the par value of its shares. However, market analysts suggest that the company actually faced a headwind in the form of a decline in market capitalization, as the market tends to perceive companies that undertake stock consolidations as having a higher risk of financial distress.
In fact, WOONGJIN THINKBIG CO., LTD. is experiencing poor performance due to declining demand for education resulting from a shrinking school-age population. On a consolidated basis, WOONGJIN THINKBIG CO., LTD.’s operating loss for the first quarter of this year was 3.4 billion won, continuing the deficit from the same period last year. Revenue stood at 179.6 billion won, a 9% decrease from the previous year (197.0 billion won). The net loss was 4.2 billion won, continuing the deficit.
Another education company, DAEKYO(019680), has also announced a stock consolidation to respond to the stricter delisting criteria, and a similar trend is expected to emerge. DAEKYO decided on the 1st to consolidate two common shares into one. As a result, the number of common shares is set to decrease from 80.47 million to 40.23 million, and the number of preferred shares is set to decrease from 19.43 million to 9.71 million.
Experts suggest that for listed companies to avoid the risk of delisting, they must focus on fundamental improvements in performance and corporate restructuring rather than merely artificially inflating their stock prices. Kim Yong-jin, a professor in the Department of Business Administration at Sogang University, said, “If a company hastily carries out a stock consolidation to avoid delisting without changing its intrinsic value, the stock price may decline in the long run,” adding, “To truly increase corporate value, earnings must improve.”