[Funding] Koiz Expects Subscription Boom Amid Growing Interest in Secondary Battery Materials

Stock Price Surges 66% Through the 23rd This Month
Price Declines Amid Profit-Taking Ahead of Subscription
Investment in Alumina Facilities Using Capital Increase Funds

[Asia Economy Reporter Hyungsoo Park] Koiz will conduct a paid-in capital increase subscription for existing shareholders over two days starting from the 25th.

According to the Financial Supervisory Service's electronic disclosure system on the 24th, Koiz will issue new shares at 2,835 KRW per share. It will issue 3 million new shares through a rights offering followed by a general public offering of unsubscribed shares, raising 8.5 billion KRW. Existing shareholders are allocated 0.183 new shares per 1 existing share. Considering the difference between the new share issuance price and the current stock price, a considerable number of existing shareholders are expected to participate in the subscription.

Recently, as secondary battery-related stocks have shown strength in the domestic stock market, Koiz's stock price also surged. It rose 66% from the beginning of this month until the 23rd. Afterwards, due to profit-taking sell-offs and concerns over new shares being issued after the capital increase, the stock price dropped from 5,500 KRW to around 4,700 KRW.

Koiz plans to invest the raised funds in facilities producing alumina and mini LED materials. Alumina (Al2O3) is one of the secondary battery cathode active material-related materials used in NCA (Nickel-Cobalt-Aluminum) and NCMA (Nickel-Cobalt-Manganese-Aluminum). Cathode active materials store lithium in the cathode and release or absorb lithium during charging and discharging of the battery.

Koiz acquired related technology from the Korea Advanced Institute of Science and Technology (KAIST) in 2020. Applying nano metal oxide generation technology, it pursued the development and commercialization of cathode material for secondary batteries. Last year, it completed development at the laboratory sample stage. After completing customer evaluations, it will begin 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.

As Koiz plans a large-scale investment in new business, optimistic forecasts for the electric vehicle market continue. According to a report released on the 25th by energy-specialized market research firm SNE Research, the electric vehicle market size is expected to grow about 2.2 times from 9.74 million units this year to 21.72 million units in 2025. The electric vehicle market is divided into Battery Electric Vehicles (BEV) and Plug-in Hybrid Electric Vehicles (PHEV). The global battery pack market size is expected to reach 159 billion USD (approximately 201 trillion KRW) by 2025.

Koiz's financial condition is poor. It has limited investment capacity to proceed with new business. As of the first quarter of this year on a consolidated basis, the debt ratio and debt dependency ratio are 780.08% and 66.1%, respectively. These figures worsened compared to the end of last year, when the debt ratio was 485.2% and debt dependency was 62.6%. The main cause was a sharp decline in sales due to sluggish orders from major clients. In the first quarter, it recorded sales of 3.2 billion KRW and an operating loss of 1.8 billion KRW. The goal is to improve profitability through the new business mass-producing alumina.

Major shareholder and CEO Jaehyung Cho holds 30.17% (5,012,378 shares) of the shares. CEO Cho plans to participate in about 10% of the allocated shares. After the capital increase, his shareholding ratio may decrease to 26.02%.