[Featured Stock] 'Supply Bomb' Warning, TS Trillion Closing Price 752 Won... Stock Price Halved

[Asia Economy Reporter Park So-yeon] The stock price of TS Trillion, which has been issued a 'volume bomb' warning, continues to decline day by day.

TS Trillion, a KOSDAQ-listed company selling the hair loss shampoo 'TS Shampoo,' closed at 752 won on the 3rd, down 32 won (4.08%) from the previous day. This is a 51% drop compared to the year's high of 1,535 won (closing price) on March 19.

TS Trillion has shown a sharp decline since the beginning of this year. After reaching a peak in March, it showed a downward trend but rebounded to 1,390 won on June 25. However, it fell again to 1,285 won on July 9, 1,120 won on September 3, 975 won on October 8, 960 won on November 19, and further dropped to the 752 won level in December.

The sharp decline in TS Trillion's stock price is analyzed to be due to concerns over a 'volume bomb.'

According to the Financial Supervisory Service's electronic disclosure on the previous day, on the 24th of last month, Jang Ki-hoon, a relative of CEO Jang Ki-young, sold 116,420 shares on the market. The disposal price was around 941 to 945 won per share, totaling about 106 million won.

In this situation, a large volume of shares is still expected to be released. On the 6th, the first tranche of convertible bonds (CB) will be converted and listed. A total of 1,594,982 shares, which is 1.75% of the total issued shares, will be released into the market. Shares can be sold starting two days before the listing date.

Additionally, about 410 million won worth of first tranche CBs that can be immediately converted remain, and the second tranche CBs worth 12 billion won, convertible from April, are also waiting. However, the conversion price of the second tranche CBs has dropped to the refixing limit of 1,142 won, so it is uncertain whether they will actually be converted.

The put option exercise date for the second tranche CBs is from April 2023, and if TS Trillion's stock price does not exceed the conversion price by then, there is a possibility of a redemption request. In this case, TS Trillion could face liquidity pressure. As of the end of the third quarter this year, TS Trillion's cash equivalents were about 1.3 billion won. The structure creates volume pressure if the stock price rises, and financial pressure if the stock price falls.

Not only CBs but also shares locked under a lock-up agreement at the time of last year's listing are expected to be released. At that time, 68.59% of shares held by CEO Jang Ki-young and his immediate family were subject to a 12-month lock-up from the listing date. This lock-up will be fully lifted on the 30th.

Already, 7.43% of shares held by some relatives, which were under a 6-month lock-up set in June, have been released. This allowed Mr. Jang to sell shares on the 24th of last month.

Meanwhile, TS Trillion recorded cumulative sales of 38 billion won and an operating loss of 4.3 billion won as of the end of the third quarter on a consolidated basis. Sales decreased by 15% compared to the same period last year, and operating profit turned to a loss.