[At a Crossroads: Listed Companies] SiseonBio's Sales Increase 21x... Performance Benefits Kim Seong-gi, CEO of Panajin, and Family 'Sweetly' ③

[Asia Economy Reporter Jang Hyowon] It has been confirmed that Siseon Biomaterials (Siseon Bio) saw its sales surge by 2000% last year thanks to exports of COVID-19 test kits. Siseon Bio is a company in which the family of Kim Sung-gi, CEO of KOSDAQ-listed Panagen, holds shares. There is no direct equity relationship between Panagen and Siseon Bio, so Siseon Bio’s performance does not affect Panagen.

Previously, Panagen faced controversy for not developing COVID-19 test kits despite having the manufacturing capability. In contrast, Siseon Bio quickly manufactured COVID-19 test kits and boosted its performance, drawing criticism for maximizing the owner family’s profits.

While Siseon Bio Recorded 27.9 Billion KRW in Sales, Panagen Only Had 1.6 Billion KRW

According to the financial investment industry on the 6th, Siseon Bio’s sales last year were 27.9 billion KRW, a 2046% increase compared to 1.3 billion KRW the previous year.

The sharp increase in sales is attributed to the production and sale of COVID-19 test kits last year. Siseon Bio developed a COVID-19 test kit based on artificial nucleic acid (PNA) and obtained emergency use authorization from the U.S. Food and Drug Administration (FDA) in April last year, becoming the fourth domestic company to do so. In May last year, its rapid diagnostic kit also received FDA approval.

In fact, most of Siseon Bio’s sales came from exports. Of the total sales last year, 26.9 billion KRW (96.4%) were export sales, a 10,000% increase from 25 million KRW the previous year.

Operating profit and net profit also surged. Last year, Siseon Bio’s operating profit was 18.6 billion KRW, turning positive from an operating loss of 2.3 billion KRW the previous year. Net profit also recorded 13 billion KRW, escaping from a deficit.

The operating profit margin was 66%. It is analyzed that the operating profit margin is high because the cost of COVID-19 test kits is low. Last year, Siseon Bio’s cost of sales was about 1.8 billion KRW. The product cost ratio was only 6.5%.

While Siseon Bio recorded large-scale performance with its high-margin COVID-19 test kit business, its affiliate Panagen showed only a slight increase in sales growth compared to Siseon Bio.

According to the Financial Supervisory Service’s electronic disclosure, Panagen recorded sales of 16.2 billion KRW last year, about a 105% increase from 7.9 billion KRW the previous year. Operating profit and net income turned positive at 5.1 billion KRW and 4.9 billion KRW, respectively, with net income increasing by 40%.

Panagen stated that it achieved good results due to the launch of new products such as DNA and RNA extraction equipment and reagents, as well as the expansion of PNA material sales.

However, the market views Panagen’s performance as disappointing compared to Siseon Bio. Although Panagen had the capability to develop COVID-19 test kits, it did not manufacture them due to management risks. Panagen only recorded about 1.6 billion KRW in sales by selling PNA materials to Siseon Bio.

Seonggi Kim, CEO of Panajin.

Siseon Bio is the ‘Family’ Company of Panagen CEO Kim Sung-gi

Siseon Bio is a company in which the family of Panagen CEO Kim Sung-gi holds more than half of the shares. There is no equity relationship with Panagen. Even if Siseon Bio records tremendous performance, it is unrelated to Panagen shareholders.

According to the industry, the largest shareholder of Siseon Bio is CEO Park Hee-kyung, holding 43.76% of the shares. CEO Park is a former head of Panagen’s research institute and the wife of CEO Kim Sung-gi.

Also, Kim’s children hold 10.64% of Siseon Bio’s shares. If Siseon Bio distributes all 13 billion KRW earned last year as dividends, Kim’s children could receive about 1.3 billion KRW after deducting only 15.4% dividend income tax. If 1.3 billion KRW is gifted to them, an estimated gift tax of about 23% would apply.

Repeated inquiries were made to Panagen and Siseon Bio officials regarding this, but no response was given.