[Asia Economy Reporter Jang Hyowon] Orient Jeonggong, a specialized automotive parts company, recorded a profit in the third quarter following the second quarter, officially entering a profit management trajectory.
According to the Financial Supervisory Service's electronic disclosure on the 12th, Orient Jeonggong's cumulative sales for the third quarter of this year on a separate basis amounted to 57.5 billion KRW, a 67% increase compared to the same period last year. This already exceeds last year's total sales by 13.8%.
During the same period, operating profit and net income reached 1.3 billion KRW and 1.2 billion KRW respectively, successfully turning to profitability. This marks the best performance in the past three years. Accordingly, the overall profitability for this year is almost certain, alleviating concerns about designation as a management item due to operating losses.
Orient Jeonggong is proceeding with a capital reduction procedure to completely resolve concerns about designation as a management item caused by capital erosion. As of the end of the third quarter on a consolidated basis, Orient Jeonggong's capital erosion rate was 45.72%, but it is expected to change to 0% once the capital reduction procedure is completed.
The capital reduction procedure was approved at an extraordinary general meeting of shareholders on October 18, and the effect of the capital reduction will take place once the creditor objection period under the Commercial Act ends on the 19th.
According to a company official, “After individually inquiring with our creditors, it was confirmed that there will be no creditor objections to the capital reduction.”
Additionally, Orient Jeonggong plans to proceed with a capital increase to improve financial structure and expand business after the capital reduction procedure. On September 3, Orient Jeonggong announced a paid-in capital increase by rights offering. The record date for new shares allocation is December 1.
A company official stated, “The new shares will be issued at a 30% discount, and the rights to receive new shares will be preferentially allocated to shareholders as of the record date in this rights offering,” adding, “There has been no reason to change the paid-in capital increase schedule so far.”
Orient Jeonggong plans to use the funds secured through this capital increase for loan repayment, facility investment, and operating funds. When the capital increase funds are received on January 17 next year, the company plans to repay 12 billion KRW of bank loans. This amount corresponds to repaying more than 60% of the current borrowings, which is expected to significantly improve the financial structure.
A company official said, “There was facility investment in the electronic shift-by-wire (SBW), a core component of the 4th industrial revolution, this year, and part of the capital increase funds will also be used for SBW expansion investment,” adding, “With this, the SBW investment, which is a key pillar of our future car business strategy, will be completed and is expected to contribute to a substantial increase in sales.”
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
