[At a Crossroads] Mediangs Strengthens Transparency with Appointment of Jang Ho-ju as Lotte Advisor

[Asia Economy Reporter Hyungsoo Park] The baby products company Mediangeu has resumed stock trading after more than a year but is being ignored by investors. This appears to reflect both the demand to liquidate shares due to the prolonged trading suspension and concerns about the sluggish domestic baby products market. Mediangeu plans to enhance corporate value by strengthening competitiveness through quality improvement in the baby products sector and increasing transparency in accounting management.

According to the Financial Supervisory Service on the 17th, Mediangeu will hold its regular shareholders' meeting on the 31st to resolve agenda items such as director appointments and approval of consolidated financial statements.

Mediangeu is pushing for the reappointment of CEO Kim Eun-jung and outside director Lee Young-soo, as well as the new appointments of outside director Hong Ji-wook and auditor Jang Ho-joo. Mediangeu, which failed to receive an unqualified audit opinion for the 2019 fiscal year and had to undergo a re-audit, recommended Jang Ho-joo, a former head of finance at Lotte Group’s Policy Headquarters and CFO of Lotte Shopping, as auditor. It is expected that his expertise and transparency in auditing will be enhanced based on his accounting experience and knowledge accumulated while working at Lotte Group.

Earlier, in March last year, Daejoo Accounting Firm issued a 'qualified' audit opinion on Mediangeu, stating that it "did not obtain sufficient and appropriate audit evidence regarding the existence and valuation appropriateness of inventory assets, the existence and valuation appropriateness of accounts receivable, and the completeness of accounts payable."

The Korea Exchange KOSDAQ Market Headquarters suspended Mediangeu’s stock trading following the qualified opinion and held a corporate review committee. The committee decided to grant an improvement period until April 12, 2021. Mediangeu underwent a re-audit and submitted the 2019 audit report with an unqualified opinion on January 15.

Daejoo Accounting Firm conducted the re-audit assuming the possibility of overstatement errors in revenue recognition and treated the appropriateness of revenue recognition as a key audit matter. As a result of the re-audit, total assets and total liabilities were adjusted. Additionally, the 2019 sales and operating profit were also reduced. Sales decreased by 1 billion KRW from 98.3 billion KRW to 97.3 billion KRW, cost of goods sold increased by 1 billion KRW from 51.4 billion KRW to 52.4 billion KRW, and operating profit was adjusted from a 2.7 billion KRW profit to a 100 million KRW loss.

After receiving the re-audit report and improvement plan implementation statement from Mediangeu, the Korea Exchange held a corporate review committee and confirmed that the formal delisting reason related to the audit opinion had been resolved. After completing the judgment on whether it was subject to substantive review, it decided to resume stock trading on the 12th.

Although stock trading has resumed, investor response remains cold. Doubts about sustainable growth have increased as sales declined last year due to the impact of COVID-19. Last year, Mediangeu recorded sales of 72.5 billion KRW and operating profit of 2 billion KRW. Sales decreased by 25.5% compared to the previous year, but operating profit turned positive.

The company explained that sales in China, a subsidiary, decreased due to the COVID-19 impact, and sales at major domestic retailers such as department stores also declined. However, it added that operating profit increased due to improvements in cost of goods sold and selling and administrative expenses.

The baby products market, Mediangeu’s core business sector, is becoming increasingly competitive. In skincare, companies such as Yuhan-Kimberly, Maeil Dairies, LG Beyond, and foreign products compete. In the nursing products market, Mediangeu, Avent, and Double Heart are engaged in fierce market competition. In detergent and baby oral care product categories, Mediangeu maintains a high market share.

Mediangeu is focusing on improving quality for sustainable growth. It is conducting research and development to remove harmful substances and improve ingredients to meet consumer expectations. Through the Ministry of Environment’s voluntary agreement on household chemical products, it discloses all ingredients in household products. This is part of efforts to build consumer trust in its products. 'Dr. Ato,' Korea’s first atopic dermatitis-specific cosmetic, is strengthening its position as a brand dedicated to sensitive skin. Mediangeu is applying its self-developed character 'Muah' to various brands such as B&B, U-Pis, and Dr. Ato. It is expected to help increase brand awareness and expand the consumer preference base. Efforts to strengthen communication with consumers through various channels such as Instagram, Facebook, blogs, and YouTube are also ongoing.

This content was produced with the assistance of AI translation services.