[News Space=Reporter seungwon lee] CHAEVI (CEOs Jeong Min-kyo and Choi Young-hun), an EV charging infrastructure company located in Daegu, recorded over 100 billion KRW in annual revenue for the first time since its founding in 2025 (101.7 billion KRW). However, 10 years after its establishment, it continues to face financial turmoil, with an operating loss of 29.6 billion KRW and a net loss of 33.8 billion KRW, bringing its accumulated deficit to 189.1 billion KRW.

Short-term borrowings surged 2.15 times from 24.1 billion KRW the previous year to 52 billion KRW. The debt-to-equity ratio jumped from 109.46% to 200.34% in just one year. With operating cash flow at -23.1 billion KRW, the company is effectively burning through cash. Additionally, the issuance of 12 billion KRW in high-interest private bonds (8.5% guaranteed yield at maturity) has pushed liquidity pressure to its limit.

Revenue Growth Without Profitability: "All Flash, No Substance"

According to the 2025 audit report (Samjong KPMG), revenue increased by 19.6% year-on-year to 101.7 billion KRW. Profitability, however, is disastrous. The cost of goods sold (COGS) reached 99.4 billion KRW (97.8% of revenue), leaving a gross profit of only 2.27 billion KRW. After accounting for 31.9 billion KRW in SG&A expenses, the company recorded an operating loss of 29.6 billion KRW (operating loss margin of -29.1%).

SG&A Expenses: R&D and Commissions Dominate

Of the 31.9 billion KRW in SG&A expenses, R&D costs (5.69 billion KRW) and commission fees (3.45 billion KRW) were the largest items. The surge in commission fees—up 40.4% from the previous year—indicates heavy reliance on external consultants, law firms, and PR agencies (currently contracted with Ham Shout Global). Furthermore, electricity costs for infrastructure operations accounted for 24.6% of total expenses (32.2 billion KRW), highlighting the structural cost burden of running a charging network.

Building a Tower on Debt

The core of the financial risk is the debt structure. Total liabilities reached 137.3 billion KRW, a 29.5% increase. Short-term borrowings and other current financial liabilities total nearly 71 billion KRW, all due within one year. The private bonds issued in August 2025 carry an 8.5% yield at maturity. Since bondholders have the right to request early redemption starting one year from issuance, the company faces a double burden if it cannot secure liquidity, as it would then have to pay additional redemption fees.

Current assets are insufficient to cover current liabilities, with the current ratio standing at 73.6%, signaling a severe lack of short-term debt repayment capacity.

Executive Compensation Amidst Red Ink

Total executive compensation (board members, etc.) amounted to 4.32 billion KRW, a 23.7% increase from the previous year (3.49 billion KRW). This increase occurred despite the company recording a 33.8 billion KRW net loss.

Expert Analysis

A corporate finance analyst pointed out, "The most glaring red flag in CHAEVI's financial statements is that, despite an accumulated deficit of 189.1 billion KRW—over 10 times the company’s capital (18.8 billion KRW)—executive pay was still increased by 23.7%. It is difficult to shake the suspicion that there is an inherent conflict of interest between shareholders and management."

The expert added, "The fact that the COGS ratio is 97.8% despite a 19.6% growth in revenue raises fundamental questions about the business model's profitability. For every 1 KRW of sales, 98 jeon (0.98 KRW) is consumed just by the cost of goods. With the debt-to-equity ratio jumping from 109% to 200% in one year, combined with short-term debt and high-interest private bonds, a liquidity crisis could strike without warning if interest rates rise or market conditions deteriorate."

Finally, the expert warned, "The auditor's note that 'future taxable income is uncertain' is evidence that even the company itself cannot estimate when it will turn a profit, which will be the biggest obstacle to its upcoming IPO or further investment."