[Funding] Maniker's Proactive Fundraising Amid Profitability Decline

Profitability Deteriorates Due to Weak First Half Sales... Debt Ratio Rises by 96.3%p
Partial Capital Impairment State... Raising Capital to Repay Debt

[Asia Economy Reporter Hyungsoo Park] Maniker, which has experienced poor performance due to the impact of the novel coronavirus disease (COVID-19), has raised funds through a rights offering followed by a general public offering of unsubscribed shares. The raised funds will be used to improve the debt ratio and reduce financial costs, thereby enhancing financial stability.

According to the Financial Supervisory Service's electronic disclosure system on the 25th, Maniker is conducting a paid-in capital increase by issuing 0.22 new shares per one existing share through a rights offering followed by a general public offering of unsubscribed shares. The planned issue price of the new shares is 547 KRW, raising a total of 21.9 billion KRW.

Maniker's sales of broiler products such as whole chicken, parts, and salted meat account for 86% of total sales. These are used as cooking raw materials for households and chicken for commercial use.

Maniker plans to use 20 billion KRW to repay some borrowings and accounts payable, and 1.9 billion KRW for operating funds. The scale of Maniker's borrowings has been increasing since last year. As of the end of the first half of this year, the total borrowings on a consolidated basis amounted to 83.5 billion KRW. Due to deteriorating profitability and a decrease in total equity, the debt ratio rose by 96.3 percentage points compared to the end of last year, reaching 204.1%. As of the end of the first half, the capital stock and total equity were 79.2 billion KRW and 62.4 billion KRW respectively, indicating a partial capital erosion where total equity is 16.8 billion KRW less than capital stock. The capital erosion ratio recorded was 21.51%.

In the first half of this year, Maniker recorded consolidated sales of 98.2 billion KRW, a 23.0% decrease compared to 127.5 billion KRW in the same period last year. Due to the decline in broiler market prices and factory shutdowns caused by a strike of consignment delivery drivers, a net loss of 25.8 billion KRW was recorded.

Amid weak demand due to COVID-19 and a decrease in group catering, the broiler industry is facing difficulties in supply control due to increased production capacity by companies. Maniker's average selling price fell by 21.3%, from 2,642 KRW per kg last year to 2,078 KRW. Competition in the market is becoming increasingly fierce. Among about 40 companies, the top four companies hold a total market share of 41%.

Due to the nature of the broiler business, where feed must be continuously supplied for survival breeding even without shipments, feed cost expenditures increased compared to the same period last year. The cost of goods sold ratio in the first half of this year reached 113.1% on a consolidated basis.

Maniker is concerned about tightening financial conditions in the financial sector amid the ongoing global economic recession caused by the COVID-19 crisis. One of the reasons for pushing forward with the capital increase is the management's judgment that securing liquidity in advance through the capital increase will enable the company to endure even if the COVID-19 situation continues for a long time.