[Featured Stock] Isu Petasys Plummets Amid 550 Billion KRW Rights Offering

Isu Petasys is experiencing a sharp decline of over 18% following the announcement of a 550 billion KRW rights offering.

As of 9:11 AM on the 11th, Isu Petasys is trading at 25,950 KRW, down 5,800 KRW (18.27%) from the previous close.

The plan to raise 550 billion KRW through a rights offering appears to have triggered the steep drop in stock price. On the 8th, after market close, Isu Petasys disclosed that it decided to proceed with a 550 billion KRW rights offering to secure funds for facility investments and acquisition of securities from other companies. Of this, 299.8 billion KRW is intended for acquiring securities from other companies, specifically for the acquisition of J.O. Isu Petasys plans to secure a 33.3% stake in J.O for approximately 300 billion KRW through issuing new shares and convertible bonds. This rights offering will be conducted via a shareholder allocation followed by a general public offering of forfeited shares, with 20,103,080 new shares to be issued.

The market reaction reflects confusion over the rationale behind the rights offering. Yang Seung-su, a researcher at Meritz Securities, commented, "The downside risk from this rights offering is judged to be greater than the simple dilution effect on earnings per share (EPS)," adding, "It is a decision that investors find difficult to understand." He further explained, "Shareholders of Isu Petasys are investors who want to share in the high growth of AI-based multi-layer substrates (MLB), not investors in secondary batteries. Although the company cites business diversification as an external reason for this management acquisition, since it is proceeding through a shareholder-allocated rights offering, it requires the investors' consensus." He also emphasized, "There is a need for detailed communication regarding the background and review process of the decision to acquire J.O, as well as the medium- to long-term growth prospects of J.O to persuade investors." Meritz Securities has lowered Isu Petasys's target price by 41% to 32,000 KRW and downgraded its investment rating from 'Buy' to 'Hold.'