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[Asia Economy Reporter Hyungsoo Park] Expectations for YesT's growth have been increasing this year. The conversion of convertible bonds (CB) issued two years ago is ongoing, and idle assets are being sold to improve the financial structure. Its subsidiary YesPowerTechnics, which has established a mass production system for silicon carbide (SiC) power semiconductors with high power conversion efficiency, also raised funds for expansion.

According to the Financial Supervisory Service on the 5th, among the 20 billion KRW worth of the 3rd series convertible bonds issued by YesT in March 2019, the outstanding unconverted bonds amount to 4.7 billion KRW, which would convert into 610,000 shares.

Convertible bond investors exercised their conversion rights for 5.4 billion KRW on the 17th of last month. Following the exercise of conversion rights, 700,000 shares will be listed on the 20th. The conversion price is 7,744 KRW, which is about 55% of the closing price of 14,200 KRW on the 4th.

Recently, YesT's stock price has risen based on growth expectations for its affiliate YesPowerTechnics. YesT's stock price has increased by about 60% since the beginning of this year. YesPowerTechnics, in which YesT holds a 34.2% stake, is a company equipped with a mass production system for SiC power semiconductors. Demand for SiC power semiconductors is increasing across various industries such as electric vehicles, hydrogen vehicles, and solar inverters. SK invested 26.8 billion KRW, seeing the growth potential of YesPowerTechnics.

Previously, YesT issued 20 billion KRW worth of convertible bonds in March 2019 to raise operating funds. At the time of issuance, investors were guaranteed a call option for 40% of the issued amount. CEO Dongbok Jang exercised the call option and acquired convertible bonds worth 8 billion KRW. If all conversion rights are exercised, CEO Jang's stake in YesT will increase to 28.6%.

CEO Jang's exercise of the call option has somewhat alleviated concerns about overhang (potential pending sell orders). A YesT official explained, "The largest shareholder, CEO Jang, acquiring additional shares reflects expectations for the expansion of YesT's existing business and growth in the SiC power semiconductor business through YesPowerTechnics."

Founded in 2000, YesT developed semiconductor heat treatment equipment including cryogenic heat treatment equipment (80~350℃) and high-temperature heat treatment equipment (above 1000℃). It has a full lineup of products in the heat treatment equipment field. Leveraging the technology and know-how accumulated from developing semiconductor equipment, it also entered the display equipment industry. To diversify its business, it expanded into component materials including Zener diodes. Through continuous R&D, it has expanded into high-growth industries such as organic light-emitting diodes (AMOLED), building a stable business portfolio alongside semiconductor equipment. Up to the third quarter of last year, it recorded sales of 45.8 billion KRW and operating profit of 1.5 billion KRW. Sales increased by more than 30% compared to the same period last year, and operating profit turned positive.

YesT will hold its regular shareholders' meeting on the 26th and appoint President Imsoo Kang as a registered executive. President Kang, a semiconductor development expert, previously served as head of Samsung Electronics' LSI development office. With President Kang joining the board, it is expected to strengthen the competitiveness of existing business divisions and support the development of power semiconductors at YesPowerTechnics. Expectations are growing that President Kang, together with CEO Jang who has strengthened management control by increasing his stake, will lead YesT's growth.

At the end of last year, YesT sold its old building in Pyeongtaek, Gyeonggi Province, for 13 billion KRW. By relocating to a new factory, it is improving its financial structure by selling idle assets and repaying borrowings.