SC Engineering Reports Operating Loss, No Dividends Due to Accumulated Deficits, Large Convertible Bond Issuance Poses Dilution Risk, Change in Controlling Shareholder to Bando Holdings
In 2025, SC Engineering recorded consolidated revenue of KRW 172.3B, operating loss of KRW 4.96B, and net loss of KRW 4.75B, turning from profit to loss year-on-year.
Due to accumulated deficits, no dividends have been paid for the past three years.
In December 2025, the company issued two series of convertible bonds (12th and 13th) totaling KRW 30B (each KRW 15B face value) for operating funds. Conversion price is KRW 1,236 with a reset clause allowing reduction to 70% of initial price. Full conversion would add 24,271,844 shares (approx. 64% of current outstanding), diluting existing shareholders.
The largest shareholder changed from EV Advanced Materials to Bando Holdings in February 2026, and the company became part of the Bando Holdings conglomerate in April 2026.
Corporate governance shows multiple deficiencies: failure to convene AGM 4 weeks in advance, no dividend policy or CEO succession plan, only one outside director with no board committees, and lack of enterprise risk management policy.
The internal audit function is a single part-time auditor (CPA), with independence partially secured but no quarterly meetings with external auditors.
Current stock price (KRW 1,040) is below the conversion price (KRW 1,236); if the reset lowers the conversion price, additional dilution risk increases.
[AI Summary]SC Engineering's financials deteriorated in 2025 with an operating loss, no dividends due to accumulated deficits, and a massive convertible bond issuance of KRW 30B that could dilute existing shareholders by up to 64%. While the change in controlling shareholder to Bando Holdings may bring long-term benefits, the near-term outlook is negative due to continued losses and dilution risk.