[Special Stock] Ssangbangwool Weakens Amid Profit-Taking After Large-Scale Mask Supply Contract

[Asia Economy Reporter Hyungsoo Park] Ssangbangwool's stock price is on a downward trend. Although it surged sharply the previous day following news of a large-scale mask supply contract, it appears that sell orders for profit-taking have been steadily coming out.

At 9:43 a.m. on the 6th, Ssangbangwool was trading at 840 won, down 5.62% from the previous day.

Earlier, on the 4th, Ssangbangwool signed a mask supply contract worth 70.8 billion won with the pharmaceutical distribution company GeoYoung. The contract period extends until July next year. The masks supplied by Ssangbangwool will be distributed to about 14,000 pharmacies that have direct transactions with GeoYoung. The contract amount corresponds to 73% of Ssangbangwool's sales revenue from last year. Ssangbangwool entered the mask business in June by signing a business agreement with Iksan City and the ECO Convergence Textile Research Institute.

Buoyed by the large-scale supply contract, Ssangbangwool's stock price surged more than 10% the previous day. The stock price, which rose to 1,045 won at one point during the session, closed at 890 won as sell orders for profit-taking poured in. The trading volume for the day reached 126.2 billion won.

One reason Ssangbangwool's stock price is showing a weak trend appears to be some uncertainty regarding the mask supply contract. Since the government discontinued the public mask supply system, demand for masks at pharmacies has decreased. After the end of public mask sales, the price of masks sold online has dropped, while most KF94 masks sold at pharmacies have maintained a price of 1,500 won. Moreover, with the rainy season continuing, demand for purchasing masks online has increased.

There is an analysis that for demand for masks sold at pharmacies to increase, price competitiveness must be secured. Regarding GeoYoung's large-scale supply contract with Ssangbangwool, if the supply price was lowered based on buying power, Ssangbangwool's profit margin could be relatively low. Ssangbangwool plans to raise large-scale funds through a paid-in capital increase to invest in mask production facilities, so large-scale distribution channels like GeoYoung are necessary.