1. Inscobee Q2 Earnings: An Earnings Surprise?
Inscobee reported revenue of KRW 28.6 billion, operating profit of KRW 600 million, and a net loss of KRW 6 billion for Q2 2025. While exceeding market expectations on revenue and achieving a profit turnaround are positive, the net loss remains substantial, and the sustainability of this profitability is questionable.
2. The Trap of Turnaround: Unstable Fundamentals
Inscobee’s turnaround to profit is likely influenced by one-off factors and a base effect. The MVNO business continues to see declining revenue due to intensifying competition, and the revenue growth in the smart grid business is attributed to the base effect. The distribution business also continues to operate at a loss. Most importantly, the financial health is dire. Debt-to-equity ratio of 144.1%, accumulated deficit of KRW 118.8 billion, and low current ratio are all serious red flags. Doubts have even been raised about its ability to continue as a going concern.
3. Lack of Future Growth Drivers: Uncertain New Business Development
New businesses, such as NFTs, secondary batteries, and data centers, have mostly been discontinued or have no plans for development. Coupled with the slowing growth of existing businesses, concerns about securing future growth drivers are significant. The notification of a tax investigation for the 2023 fiscal year can also act as a burden for investors.
4. Investor Action Plan: A Cautious Approach is Necessary
Don’t be fooled by short-term stock price fluctuations. Carefully examine the company’s fundamentals, financial risks, and business uncertainties. Also be mindful of the potential for stock dilution and increased interest burden due to convertible bond issuances. At this point, caution is advised, and investors should consider holding or even selling their positions.
Q: Why should I be cautious about Inscobee’s Q2 results?
A: While the turnaround to profit appears positive on the surface, there are underlying traps of serious financial risks and a lack of future growth drivers. With concerns about its ability to continue as a going concern, caution is warranted.
Q: What are Inscobee’s main businesses?
A: Its main business is Mobile Virtual Network Operator (MVNO), and it also operates smart grid and distribution businesses, including cosmetics. However, profitability is unstable across all business segments, and growth is slowing.
Q: What are the biggest risk factors when investing in Inscobee?
A: The biggest risks are the deteriorating financial health, including high debt-to-equity ratio, continuous net loss, and convertible bond burden, along with the uncertainty surrounding its ability to continue as a going concern.
Leave a Reply