[Funding] Koiz Invests in Alumina Equipment... Plans Full-Scale Mass Production Next Year

Raising 8.3 Billion KRW Through Rights Offering to Fund New Business Investments
Debt Ratio at 485% Due to Last Year's Poor Performance
Major Shareholder's Participation in Capital Increase Undecided... Funding Plans Under Review

[Asia Economy Reporter Hyungsoo Park] Koiz has begun raising funds to start mass production of aluminum oxide. The company plans to start mass production approval from the second quarter of this year and begin full-scale delivery to customers who have completed evaluations starting next year.

According to the Financial Supervisory Service's electronic disclosure system on the 21st, Koiz will conduct a paid-in capital increase through a rights offering followed by a general public offering of forfeited shares, allocating 0.183 new shares per existing share. It will issue 3 million new shares at 2,755 KRW per share, raising 8.265 billion KRW.

The raised funds will be invested in facilities producing aluminum oxide and mini LED materials. Koiz is preparing to mass-produce aluminum oxide (Al2O3) used in NCA (Nickel-Cobalt-Aluminum) and NCMA (Nickel-Cobalt-Manganese-Aluminum), which are cathode active materials related to secondary batteries, as part of its business diversification.

Cathode active materials are one of the four core raw materials of batteries. They store lithium in the cathode and release or absorb lithium during charging and discharging. They play a role in storing and releasing electrical energy within the battery.

Koiz acquired related technology from the Korea Advanced Institute of Science and Technology in 2020. Applying environmentally friendly and cost-saving nano metal oxide generation technology, it pursued the development and commercialization of cathode material for secondary batteries. Judging that aluminum oxide has price competitiveness, it completed laboratory sample stage development last year. After completing customer evaluations, it will start full-scale mass production this year. It will invest 2.6 billion KRW to build production facilities and 2.5 billion KRW for operating expenses and raw material purchases.

Koiz is also developing silicon products for mini LEDs, which are attracting attention as next-generation displays. It has received requests from three domestic customers and is conducting sample responses and joint technology development. It plans to establish a pilot line from the second half of this year and prepare for mass production facilities. Full-scale mass production is planned to start in 2024.

The reason Koiz is making large-scale investments in new businesses is related to the decline in sales of existing display optical films and light guide plates. Last year, it recorded sales of 16.187 billion KRW on a consolidated basis, a 56.2% decrease from the previous year. Sales related to display optical films and light guide plates were affected by semiconductor supply issues and panel price increases. Major customers focused their business on premium TVs, causing a sharp drop in sales. The transfer and reorganization of major customers' business divisions in the second half of last year also caused a gap in product orders, acting as a negative factor.

Consolidated gross profit margin declined from 11.0% in 2019 to 10.7% in 2020 and -14.1% last year. Consolidated operating profit margin also deteriorated from -8.0% in 2019 to -5.3% in 2020 and -58.1% in 2021.

Due to poor performance, financial stability risks have increased. At the end of last year, the consolidated debt ratio and dependence on borrowings were recorded at 485.24% and 62.6%, respectively.

Major shareholder CEO Jaehyung Cho holds 30.17% (5,012,378 shares) of the shares. Although various plans are being considered to raise subscription funds, the decision to participate in the subscription for allocated shares has not been made. If the CEO does not participate in the subscription, the major shareholder's stake could decrease to 25.55% after the capital increase.