1. What Happened? KH Mirae Mulsan’s Q2 2025 Earnings

KH Mirae Mulsan reported revenue of ₩1.9 billion (down 17% YoY), an operating loss of ₩600 million (loss narrowed YoY), and net income of ₩22.8 billion (turnaround to profit). While the return to profitability appears positive, the declining revenue and persistent operating losses raise red flags.

2. The Catch: One-off Gains and Fundamental Weakness

The primary driver of the net income turnaround was valuation gains from investments in affiliated companies – essentially a one-off gain. Meanwhile, the core audio equipment manufacturing business continues to struggle, with low capacity utilization suggesting intensified market competition. Moreover, serious issues remain, including three consecutive audit disclaimers, delisting risk, and allegations of embezzlement and breach of trust.

3. Key Investor Checkpoints

  • Audit Disclaimers: Reduced reliability of financial information and potential delisting.
  • Core Business Struggles: Continued difficulties in the audio equipment segment and low capacity utilization.
  • Financial Risks: High debt-to-equity ratio and reliance on valuation gains.
  • Legal Risks: Ongoing lawsuit related to embezzlement and breach of trust allegations.

4. Investor Action Plan: Proceed with Caution and Monitor Closely

Investing in KH Mirae Mulsan carries substantial risk. New investment is not recommended, and existing investors should proceed with extreme caution. Closely monitor the company’s restructuring efforts, resolution of the audit disclaimers, and the outcome of the legal proceedings.