Humax, Rising Possibility of CB Redemption Demand Due to Stock Price Decline '↑'

Humax, Stock Price at 2,300 Won... Lower Than CB Conversion Price
Must Pay 33 Billion Won for CB Redemption... Cash Assets of 45.7 Billion Won in Q1

Convertible bonds (CB) issued by Humax in the 10th, 18th, and 19th series are facing a high possibility of redemption requests as their conversion periods have arrived, but the conversion prices are higher than the current stock price. If redemption requests are made, Humax will have to repay more than 30 billion KRW.

According to the financial investment industry on the 23rd, the conversion request periods for the 10th, 18th, and 19th series CBs issued by Humax have either started or are about to start. The 10th series conversion period is from June 15, 2021, to May 15, 2025; the 18th series from June 14 this year to November 14, 2025; and the 19th series from March 14 this year to February 14, 2028.

The number of shares convertible for the 10th series is 47,781 shares, for the 18th series 2,312,138 shares, and for the 19th series 4,611,564 shares, totaling 6,971,483 shares. This corresponds to 15.86% of the total 43,970,124 shares. If these shares are issued during the conversion period, concerns about overhang (potential large-scale selling pressure) may arise.

However, at present, the possibility of redemption is higher than that of stock conversion leading to overhang. The conversion price for the 10th series CB is 2,930 KRW, and for the 19th series, it is 2,819 KRW. On the 22nd, Humax’s stock price was 2,310 KRW, which has already fallen below the minimum conversion price. In particular, the 18th series CB, issued in December 2022 with a nominal interest rate of 5% and a maturity interest rate of 9%, amounting to 20 billion KRW, has a conversion price of 8,650 KRW. Since the conversion price differs significantly from the current stock price, stock conversion is unlikely even when the conversion period arrives.

If conversion does not occur and early redemption or maturity approaches, Humax’s burden is expected to increase. The remaining total amounts are 140 million KRW for the 10th series, 20 billion KRW for the 18th series, and 13 billion KRW for the 19th series, totaling 33.14 billion KRW. As of the first quarter on a consolidated basis, Humax’s cash and cash equivalents stood at 45.68055 billion KRW. Cash equivalents, which reached 94.19007 billion KRW in 2021, have decreased by more than half in just over two years.

Humax is engaged in businesses such as gateways, automotive antennas, and digital solution development. Consolidated sales, which were 689.5 billion KRW in 2022, decreased to 652.6 billion KRW last year. However, operating profit turned positive, recording 11.2 billion KRW. In the first quarter of this year, sales and operating profit were 183.1 billion KRW and 6.9 billion KRW, respectively. Compared to the same period last year, sales increased by 26.39%, and operating profit surged by 1493.77%.