[After CB Issuance] AD Technology, Improved Performance and High Stock Price... Conversion Requests 'One After Another'

[Asia Economy Reporter Hyunseok Yoo] The convertible bonds (CB) worth 15 billion KRW issued by AD Technology are being converted into stocks one after another. This is because the stock price has risen more than 40% compared to the issue price due to expectations of growth in the non-memory semiconductor market and improved earnings.

According to the Financial Supervisory Service's electronic disclosure system (DART) on the 6th, AD Technology privately issued the 3rd series convertible bonds (CB) worth 15 billion KRW in August last year to raise operating funds. Shinhan Investment Corp., Meritz V High Technology Investment Association, and Korea Investment & Securities were among the investors.

The terms at issuance included both a nominal interest rate and maturity interest rate of 0%. The conversion request period is from August 28 of last year to July 28, 2024. The conversion price was lowered from 17,650 KRW to 16,143 KRW on July 15. This adjustment was made following a rights offering and general public offering worth a total of 67.4 billion KRW on July 2 by AD Technology.

Although the conversion price decreased, the stock price, which was 18,526 KRW at the beginning of the year, rose to as high as 34,900 KRW on August 4. This was a 104.03% increase compared to the end of last year. This is attributed to the growth potential of the non-memory market and improved earnings. Thanks to this, CB investors have been able to convert their bonds into stocks one after another.

In the first half of this year, AD Technology recorded consolidated sales of 132.5 billion KRW and operating profit of 7.2 billion KRW. This represents increases of 69.3% and 89%, respectively, compared to the same period last year. Among products, mobile-related sales increased from 57.6 billion KRW in the first half of last year to 102 billion KRW this year, and big data sales rose from 8.9 billion KRW to 18 billion KRW.

Recently, the company expanded its scale by acquiring Eagleam, a register-transfer level (RTL) design specialist, and Argo, a Samsung Electronics DSP (Design Solution Partner). Along with this, the diversification of client companies is expected to have a positive effect. In particular, Samsung Electronics’ announcement of investment in the non-memory market also acted as a favorable factor.

The sharp rise in stock price led to the conversion of CBs into stocks. On August 28, the first day of exercising the conversion rights, a disclosure was made that CBs worth 5.2 billion KRW would be converted into stocks. The issued shares amounted to 322,118, and the listing date was the 16th of last month. On that day, AD Technology’s closing price was 28,000 KRW. It is estimated that about 4 billion KRW in gains were realized from a total amount of 9 billion KRW.

Subsequently, on the 21st and 29th of last month, conversion requests of 2 billion KRW and 3 billion KRW were disclosed, respectively. The number of issued shares was 123,892 and 185,839, respectively. If the closing price remains at the previous day’s level of 24,900 KRW until the listing date on the 16th, the total amount will be about 7.7 billion KRW, with an estimated gain of approximately 2.7 billion KRW. As a result, the total profit gained so far is 6.7 billion KRW.

AD Technology is a chipless company specialized in the system (non-memory) semiconductor process. Chipless companies receive design service orders from fabless (semiconductor design) companies, develop the designs, produce them through foundry companies, and deliver them to clients.