[News Space=Reporter seungwon lee] Boryung Holdings (CEO Kim Jung-kyun) recorded a 2025 net profit of 10.46 billion KRW, an 83.2% plunge from the previous year, effectively signaling an 'earnings shock.' The company reported an operating loss of 257 million KRW, its second consecutive year of operating losses, while cash and cash equivalents evaporated by 97.3%, falling from 5.21 billion KRW to 141 million KRW, showing signs of cash depletion.

Notably, rental expenses surged by 92.5% to 5.4 billion KRW, further worsening profitability. Furthermore, potential risks loom, including 93.1 billion KRW in unrecognized cumulative losses surrounding its affiliate, HP Solid, and 53.4 billion KRW in provisional seizure payment guarantees, exposing structural weaknesses in the holding company’s financial structure.

Profitability: Second Consecutive Year of Operating Losses

According to the 2025 audit report, Boryung Holdings' revenue was 8.97 billion KRW, a 1.8% decrease from the previous year. Although gross profit was 8.97 billion KRW (as there was no cost of sales), selling, general, and administrative (SG&A) expenses exceeded this at 9.23 billion KRW, leading to an operating loss of 257 million KRW. The operating profit margin stands at -2.9%.

While net profit appears to be 10.46 billion KRW on paper, this is an 'optical illusion' maintained by non-operating income, such as equity method gains (18.97 billion KRW) and interest income (1.01 billion KRW). Compared to the previous year's net profit (62.19 billion KRW), it represents an 83.2% collapse.

The 'Office Sublease' Trap

The most notable item in SG&A expenses is rental costs. In 2025, these costs soared by 92.5% to 5.4 billion KRW. The audit report shows that Boryung Holdings engages in a 'pass-through' office subleasing contract, where it pays rent to a building owner and then subleases it to an affiliate to book revenue. The problem is that the scale of this structure has doubled compared to 2024.

Cash Evaporation and Liquidity

Cash and cash equivalents at the end of 2025 stood at only 141 million KRW, a 97.3% decline from 5.21 billion KRW the previous year. Short-term financial instruments also decreased by 42.7% to 19.98 billion KRW. While the company improved its current ratio significantly by repaying short-term borrowings, its absolute liquidity is severely constrained.

Dividend Policy: Hoarding Profits

Boryung Holdings did not pay any dividends to shareholders in 2025, continuing its policy from 2024. Despite holding 132.2 billion KRW in retained earnings, it did not even set aside legal reserves, carrying the entire amount forward. Ironically, while the owner family—which holds 95.95% of the shares—received no dividends from the holding company, Boryung Holdings received 2.55 billion KRW in dividends from its affiliate, Boryung Co., Ltd.

Risks from Affiliate 'HP Solid'

The audit report highlights the risks posed by HP Solid, an affiliate in which Boryung Holdings holds a 50% stake. HP Solid is effectively in a state of complete capital impairment (total assets 350 million KRW vs. total liabilities 18.97 billion KRW). Boryung Holdings has 9.3 billion KRW in unrecognized cumulative losses related to this entity, signaling potential future losses. Additionally, Boryung Holdings has provided joint and several guarantees for HP Solid's debt repayment obligations.

Legal Risks and Uncertainties

Boryung Holdings faces 5.34 billion KRW in payment guarantees related to damages from a provisional seizure dispute. The company has set aside 2.85 billion KRW in provisions, which increased from the previous year, signaling growing potential losses.

Conclusion: Structural Vulnerability

Financial experts pointed out, "Boryung Holdings earns zero money from its core operations. With two consecutive years of operating losses and cash assets shriveled to 140 million KRW, the 10.4 billion KRW net profit is merely an 'accounting illusion' created by equity gains from Boryung Co., Ltd. Even that is under pressure as the stock price of Boryung Co., Ltd. has declined."

They added, "The structure of absorbing dividends from subsidiaries while paying nothing to shareholders, and the mounting liabilities from affiliates like HP Solid, creates a precarious environment. Absorbing Boryung Partners via merger may simply concentrate all these risks within the holding company."