Yes24, Boosted by HBM, CB Investors Hit the Jackpot

114 Billion KRW Convertible Bonds Converted to Shares... Total Volume Around 5%
Stock Price Trending Upward on Semiconductor Equipment Momentum

YesTY, a KOSDAQ-listed company, is converting convertible bonds (CB) worth 11.4 billion KRW into shares. Recently, due to the high-bandwidth memory (HBM) issue, YesTY's stock price surged sharply, and since the conversion price is only about half of the current stock price, CB investors are expected to earn high returns.

According to the Financial Supervisory Service's electronic disclosure system on the 25th, YesTY announced that the 6th series CB worth 11.4 billion KRW has been requested for conversion into shares. The total conversion shares amount to 1,116,468 shares, which corresponds to 5.86% of the total issued shares. The new shares are scheduled to be listed on May 10.

The 6th series CB was initially issued last April with a scale of 35 billion KRW. Various institutions such as Shinhan Investment Corp., DB Financial Investment, Hana Securities, GVA Asset Management, and SP Asset Management invested in this CB. With a zero percent nominal interest rate, it is interpreted as an investment made with some confidence in stock price appreciation.

YesTY used 10 billion KRW of the funds raised at that time to repurchase and cancel the existing 5th series CB and spent another 10 billion KRW on developing new semiconductor equipment. The remaining funds will be used to exercise a 30% call option (sell request right) on the 6th series CB and then cancel the bonds.

The conversion price of this CB is 10,191 KRW per share, which is about half of YesTY's closing price the previous day. Even with stock dilution from the new share issuance, investors can expect sufficiently high returns. Excluding the call option volume, an additional CB worth approximately 13.1 billion KRW is expected to be converted, but even combined with this conversion volume, it accounts for about 11% of the total shares outstanding.

YesTY's earnings momentum remains strong. YesTY is a company engaged in manufacturing semiconductor and display equipment. The sales composition is 62% semiconductor equipment and 32% display equipment. Last year, on a separate basis, it recorded sales of 64.3 billion KRW and an operating profit of 2.1 billion KRW, successfully turning profitable.

The improvement in performance is attributed to increased demand for next-generation semiconductor equipment such as core HBM equipment and Neocon high-efficiency humidity control devices. Last year, YesTY secured orders worth 32.2 billion KRW for HBM wafer pressing equipment and EDS chillers. The market expects sales from HBM equipment alone to exceed 60 billion KRW this year.

Additionally, orders for the high-efficiency humidity control device Neocon have accumulated to about 6.5 billion KRW by early this year. After developing Neocon in 2022, YesTY began supplying an initial 50 units in 2022, and more than 100 units are expected to be ordered this year. Neocon's profit margin is around 40%, which is expected to contribute to profitability improvement.

Experts point to YesTY's biggest momentum as its "high-pressure annealing equipment." This equipment improves electrical characteristics by replacing wafer silicon surface defects occurring during the semiconductor oxidation process with high-pressure hydrogen and deuterium.

Currently, the domestic company HPSP exclusively supplies this equipment to major semiconductor companies. Accordingly, HPSP filed a lawsuit against YesTY last September, alleging patent infringement. Nevertheless, the market views YesTY's potential market entry positively.

Choi Jae-ho, a researcher at Hana Securities, analyzed, "YesTY's high-pressure annealing equipment completed mass production quality tests for Company S's memory process last year and is currently undergoing tests with foundries. Based on long-standing experience, accumulated precise temperature and pressure control technology, and networks with clients, YesTY is setting improved performance and lower delivery prices compared to competitors, making it highly likely to be adopted by clients."