South Korea's Samsung Biologics soars as it avoids delisting

[SEOUL] Samsung Group's biotechnology arm rallied Tuesday as a Korea Exchange evaluation committee decided not to delist the unit's shares after financial regulators concluded it violated accounting rules.

Shares of Samsung Biologics Co., the seventh-biggest member of the benchmark Kospi index as of Monday's close, jumped as much as 26 per cent, set for its biggest rally on record, after the panel said financial stability and continuity of business outweighed a lack of management transparency. The KRX plans to monitor Samsung Biologics's efforts to improve management transparency for the next three years.

Trading in Samsung Biologics resumed Tuesday following a trading halt since Nov. 15, after the country's financial regulator said the company intentionally broke accounting rules surrounding its initial public offering in 2016 and could face a criminal investigation. Through the suspension, the shares lost almost US$10 billion in value since Samsung Biologics disclosed in May its accounts were audited.

Samsung Biologics said in an emailed statement that it is "very fortunate" that KRX has decided to resume trading of its shares.

The trading resumption is expected to have a positive impact on the entire sector, said Jaeik Kim, an analyst at HI Investment & Securities, and that was reflected in Tuesday's moves: ViroMed Co. climbed as much as 2.4 per cent, while Medipost Co. rose as much as 1.8 per cent.

One peer, though, didn't benefit from the positive sentiment. Celltrion Healthcare Co. fell as much as 9.2 per cent after a report that South Korea's Financial Supervisory Service launched an audit into alleged "accounting fraud," without citing anyone. Regulators are investigating whether the company inflated second-quarter revenue, avoiding a loss, by reflecting the gains from the sale of its exclusive domestic sales rights to affiliate Celltrion Inc., according to the report. Celltrion Healthcare said in a statement that wasn't a violation of accounting standards.

BLOOMBERG