"Hyunju-ga and 3rd Round CB Conversion Price Difference 40%"
"Continued Poor Performance... 22.8 Billion KRW in Cash Equivalents in Q3"
The conversion price of Sungil Hi-Tech's 3rd tranche convertible bonds (CB) has dropped to its lowest level. Currently, the company's performance and stock price are both sluggish. When the CB redemption period arrives, it is expected to put pressure on the company.
According to the financial investment industry on the 6th, Sungil Hi-Tech recently announced that the conversion price of the 3rd tranche CB was adjusted from 79,171 KRW to 55,420 KRW. This is the lowest adjustment limit. The number of convertible shares increased from the existing 631,544 shares to 902,201 shares. Sungil Hi-Tech issued the 3rd tranche CB in April this year targeting Selenion Asset Management, A-One Asset Management, Timefolio Asset Management, Orion Asset Management, and others. The coupon rate and maturity interest rate are 0% and 2%, respectively. The funds will be used to operate the Saemangeum Plant 3.
Recently, both Sungil Hi-Tech's stock price and performance have been sluggish. Established in 2000, Sungil Hi-Tech operates a business that extracts valuable metals from secondary batteries used in ▲electric vehicles ▲mobile phones ▲laptops ▲energy storage systems (ESS) ▲power tools, among others. It is a specialized secondary battery recycling company.
Sungil Hi-Tech, which entered the KOSDAQ in 2022, showed a strong upward trend with its stock price exceeding 180,000 KRW in March last year. The company's initial public offering price was 50,000 KRW. However, due to the electric vehicle chasm (temporary demand stagnation) and other factors, its performance began to deteriorate. Sales on a consolidated basis were 269.9 billion KRW in 2022 but decreased to 247.4 billion KRW last year, and operating profit turned to a loss, recording an 8.4 billion KRW deficit.
The performance did not improve this year either. As of the third quarter of this year, cumulative sales were 102 billion KRW, and operating loss was 20.2 billion KRW. Sales decreased by 50.02%, and operating profit turned negative. The outlook for next year is also uncertain. IBK Investment & Securities, which released a report last month, predicted that Sungil Hi-Tech would return to profitability in the third quarter of next year and on an annual basis in 2026. This is due to the delay in demand for cathode materials, minerals, and other secondary battery-related products caused by the global electric vehicle demand slowdown that has continued since the second half of last year.
In particular, when the conversion request period begins, it is expected to put pressure on Sungil Hi-Tech. This is because there is a large gap between the current stock price and the conversion price, and cash assets are also decreasing. The conversion request period for the 3rd tranche CB is from October 30, 2025, to March 30, 2027, and the maturity date is April 30 of the same year. Sungil Hi-Tech's closing price on the previous day was 39,850 KRW. The difference from the 3rd tranche CB conversion price is nearly 40%. Additionally, as of the third quarter of this year, cash assets were 22.8 billion KRW, a 25.2% decrease compared to the third quarter of last year.
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