"Thanks to COVID-19 Diagnostic Kits"... Suzentec CB Investors and Employee Stock Ownership Hit the Jackpot

[Asia Economy Reporter Hyunseok Yoo] Convertible bond (CB) investors of SuzenTech and employees who received employee stock ownership plans (ESOP) are beaming with joy. This is thanks to the stock price soaring nearly 500% this year due to the novel coronavirus disease (COVID-19).

According to the financial investment industry on the 29th, SuzenTech closed at 32,200 KRW the day before. This marks a 487.59% increase compared to the end of last year.

SuzenTech is a company specializing in multiplex immunoblot diagnostic systems for general hospitals and specialized clinical examination institutions. The driving force behind this year's sharp rise in stock price is its COVID-19 diagnostic kits. In January, SuzenTech announced the development of a blood-based COVID-19 diagnostic kit. Then, in March, it succeeded in developing a rapid diagnostic kit capable of determining COVID-19 infection within 10 minutes and obtained manufacturing approval for export items from the Ministry of Food and Drug Safety in the same month. Last month, it also completed product registration with the U.S. FDA.

Notably, on the 10th of last month, SuzenTech announced a supply contract to provide COVID-19 antibody rapid diagnostic kits to the Indonesia region, among a total of 10 diagnostic kit supply contracts disclosed since last month. This has brightened performance prospects. Shinhan Financial Investment forecasts that SuzenTech's sales and operating profit will reach 398.8 billion KRW and 302.9 billion KRW respectively this year. Sales are expected to increase by 1002.3% compared to the previous year, and operating profit will turn positive.

Thanks to the rise in stock price driven by COVID-19 diagnostic kits, SuzenTech employees are also smiling. At the time of listing, SuzenTech allocated 10% of the 1.5 million newly issued shares, or 150,000 shares, to the employee stock ownership association. The price per share was 12,000 KRW. The value, which was only 1.8 billion KRW based on the public offering price, has increased to 4.83 billion KRW as of this date. There were 64 employees who received ESOP shares at that time, increasing the value per person from 28.12 million KRW to 75 million KRW based on the public offering price. The ESOP lock-up period ended on the 27th. A company official explained, "After listing, the company's stock price fell to less than half of the public offering price, which was a time of hardship for employees."

Beyond ESOP, CB investors have been able to gain even greater profits. On September 19th last year, SuzenTech issued CBs worth 10 billion KRW to raise operating funds. The conversion price was 6,320 KRW, and the number of convertible shares was 1,582,278 shares. The investors included NH Investment & Securities (3.35 billion KRW), Samsung Securities (2.45 billion KRW), KB Securities (2 billion KRW), Mirae Asset Daewoo (850 million KRW), Shinhan Financial Investment (350 million KRW), Korea Investment & Securities (700 million KRW), K&T Partners (100 million KRW), and Park Jung-taek (200 million KRW), among others.

After the CB issuance, SuzenTech's stock price declined, lowering the conversion price to 5,830 KRW in December last year and increasing the number of convertible shares to 1,715,265 shares. However, since the stock price began to rise significantly from January, the increase in convertible shares has become a positive factor. Based on the closing price the day before, the valuation of the CBs held by these investors is 55.26583 billion KRW. Since the conversion request period starts from September 23rd, if the stock price maintains its current level, they can earn a profit of 45 billion KRW excluding the initial investment of 10 billion KRW.