Ahead of Final Verdict on Celltrion Accounting Fraud
Second Most Net Bought Stock in Financial Investment Sector
Stock Price 45% Lower Than Peak
[Asia Economy Reporter Ji Yeon-jin] Ahead of the financial authorities' final decision on the accounting fraud allegations against Celltrion, securities firms and the financial investment industry have been actively buying Celltrion shares.
According to the Korea Exchange on the 4th, from the 25th of last month until the day before, financial investment firms net purchased Celltrion shares worth 12.4 billion KRW, making it the second most bought stock after Samsung Electronics (49 billion KRW). During this period, the financial investment sector net sold stocks worth approximately 143.7 billion KRW, limiting the stock market's upward trend as it tried to recover from the impact of Russia's invasion of Ukraine.
Celltrion's stock price, which reached 328,305 KRW in March last year due to expectations for COVID-19 treatments, declined alongside growth stocks amid concerns over US interest rate hikes. Additionally, when the Securities and Futures Commission (SFC) under the Financial Services Commission began discussions on Celltrion's accounting fraud allegations in January, the stock plunged to 147,000 KRW. The closing price on the previous day (171,000 KRW) surged over 7% following reports that some SFC members believed there was insufficient clear evidence to prove intentional accounting fraud, but it still remains about 45% lower than its peak. The financial investment industry is interpreted to have started buying at low prices in anticipation that the SFC will make a final decision on Celltrion's accounting fraud allegations within this month. Kiwoom Securities researcher Heo Hye-min said, "It is difficult to predict the schedule and outcome of Celltrion's audit, so a cautious stance continues, but once the decision on sanctions is made, it is expected to resolve uncertainties," adding, "However, it is necessary to confirm the level of sanctions before approaching."
Earlier, the Financial Supervisory Service reported that Celltrion Healthcare generated sales by selling domestic drug distribution rights to Celltrion for around 20 billion KRW and inflated the value of inventory assets by not treating expired raw materials as losses. Along with the accounting audit results, the FSS forwarded a recommendation for prosecution to the SFC. The SFC received the final audit report from the Audit Committee in January and began discussions, with a conclusion expected this month. However, a Financial Services Commission official stated, "There is no legally set deadline from the listing of the SFC agenda to the resolution," and added, "The decision on whether and to what extent measures will be taken against Celltrion has not yet been finalized."
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