Ioniq 6, Kona Electric, Ioniq 5 Robotaxi Bumper and Console Production
Approval of Business Restructuring Plan for Electric and Hydrogen Vehicle Parts Conversion
Lightweighting and High Value-Added Using Hyper Plastic Materials
Debt Ratio 543.6% in H1... 7 Billion KRW Debt Repayment
[Asia Economy Reporter Yoo Hyun-seok] Ecoplastic is launching a paid-in capital increase worth 24 billion KRW. The funds will be invested in the development of eco-friendly vehicle molds and the production of new parts for Hyundai Motor Company. The company plans to increase sales related to electric vehicles in the mid to long term.
According to the Financial Supervisory Service's electronic disclosure system (DART) on the 9th, Ecoplastic will proceed with a paid-in capital increase of 24 billion KRW through a rights offering followed by a general public subscription for unsubscribed shares. The planned issue price for the new shares is 2,830 KRW, with 25,669,370 new shares to be issued. The issue price will be finalized on November 3.
Ecoplastic is a manufacturer of automotive body parts, primarily supplying plastic bumpers. Its main customers are Hyundai Motor Company and Kia.
In recent years, performance has stagnated. In 2018, on a consolidated basis, the company recorded sales of 1.0843 trillion KRW and an operating loss of 3.7 billion KRW. In 2019, sales were 1.2162 trillion KRW with an operating profit of 10.9 billion KRW, and last year sales reached 1.2918 trillion KRW with an operating profit of 2.3 billion KRW, showing that sales remained around 1.2 trillion KRW over the past two years. In the first half of this year, sales were 730.4 billion KRW with an operating profit of 10.8 billion KRW. Compared to the same period last year, sales increased by 29.74%, and operating profit turned positive.
The company plans to invest 17 billion KRW of the raised funds into facilities. Specifically, from January next year to October 2023, it plans to invest 5 billion KRW in molds. It will produce bumpers and consoles used in eco-friendly vehicles such as Hyundai’s Ioniq 6, Kona Electric, and Ioniq 5 Robotaxi.
Additionally, from next year until December 2024, 12 billion KRW will be invested to expand the vehicle lightweighting business. Ecoplastic received approval for a business restructuring plan for converting internal combustion engine vehicle parts companies to electric and hydrogen vehicle parts from the 28th Business Restructuring Plan Review Committee of the Ministry of Trade, Industry and Energy last year. Through this, the company plans to promote lightweighting and high value-added products using hyper plastic materials. Currently, it is developing tailgate panels and lightweight parts for electric and hydrogen vehicles.
The remaining 7 billion KRW will be used for debt repayment. Ecoplastic recorded a debt ratio of 543.6% on a consolidated basis in the first half of this year. Last year, it was 475.3%. High reliance on borrowings is one of the main causes. Ecoplastic’s consolidated borrowings decreased from 218.8 billion KRW in 2019 to 176.2 billion KRW last year but increased again to 199.9 billion KRW in the first half of this year. As a result, the borrowing dependency ratio rose from 27.9% last year to 31.1% in the first half of this year.
The largest shareholder, Seojin Automotive (with a 27.40% stake), plans to participate 100% in this paid-in capital increase. Seojin Automotive has been financially unstable, recording operating losses on an individual basis for the past four years and being designated as a management item. However, Ecoplastic explained in its securities registration statement, "Although the largest shareholder Seojin Automotive currently has a weak financial situation, it plans to subscribe 100% of the allocated shares by utilizing additional loans."
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