[Featured Stock] Classys Falls on Large-Scale New Share Listing... Sale Rumors Also Seem to Contribute

Domestic beauty device company Classys experienced a sharp decline in the early trading session due to the burden of a large-scale new share listing issued during the merger with Iruda, along with reports of the major shareholder's sale push.

As of 9:20 a.m. on the 22nd, Classys was trading at 56,100 KRW on the KOSDAQ market, down 5,800 KRW (9.37%) from the previous session.

The stock opened at 59,200 KRW that day but plunged to a low of 55,600 KRW. This was a reversal within a day after hitting a 52-week high of 62,900 KRW during the previous session.

The sharp drop in stock price is believed to be influenced by concerns over the 'overhang (potential sell-off volume)' as the new shares issued during the absorption merger with Iruda began circulating from that day. The newly listed shares amount to 1,506,140, representing 2.3% of the total issued shares.

Reports from the previous day that Classys is up for sale as a merger and acquisition (M&A) target also shook investor sentiment. According to the reports, Bain Capital, a global private equity fund (PEF) operator and the largest shareholder of Classys, has entered the process of selling the company. The sale target includes approximately 61% of shares, including management rights.

However, the market is expressing expectations of synergy from the M&A. The third-quarter earnings outlook is also positive. Mirae Asset Securities forecasted Classys' third-quarter sales to increase by 23% year-on-year to 59.5 billion KRW, marking a record high. Operating profit is expected to rise by 20% to 29.7 billion KRW, meeting market expectations.

Researcher Kim Choong-hyun of Mirae Asset Securities stated in a report on the 21st, "The company's stock price has continued a rally, rising more than 20% over the past three months, establishing itself as a global leader in beauty devices," adding, "This is due to expectations of three synergies: becoming a total solution provider through equipment diversification after the Iruda merger, regional diversification and distribution optimization, and expansion of indications."

Researcher Kim estimated next year's sales to increase by 41% year-on-year to 348.1 billion KRW, with operating profit reaching 164.3 billion KRW. He explained, "The company has not yet provided specific synergy and financial guidance after the merger," and "The performance estimate was made by simply summing up Classys and Iruda."