Conversion price 626 won... CB investors expect 60% profit
Grouped as Lee Jae-myung theme stock... Stock price up 90% since late November
Investors in the 8th series convertible bonds (CB) of Hyeongji I&C are expected to record a return of over 60%. This is because the company's stock price surged sharply as it became associated with the 'Lee Jae-myung theme stock' amid the impeachment political turmoil.
According to the Financial Supervisory Service's electronic disclosure system on the 13th, Hyeongji I&C announced that conversion rights for a total of three 8th series CBs were exercised on the 10th and 11th of this month. The total amount is 2.26 billion KRW. The listing date is set for the 30th of this month. The conversion price per share is 626 KRW, and 3,610,210 shares, which is 14.16% of the total 25,496,197 shares, are expected to be issued. The remaining balance is 1.94 billion KRW.
Since 14% of the total shares will be released into the market, concerns about overhang (potential large-scale sell-off) cannot be avoided. However, from the perspective of CB investors, they can achieve high returns. Given that Hyeongji I&C's closing price on the 12th was 990 KRW, if the current stock price is maintained until the stock conversion date, Eugene Investment & Securities, the issuer of the 8th series CB, will record a return of 58.15%.
Hyeongji I&C issued 8th series CBs worth 4.2 billion KRW in August last year. The coupon and maturity interest rates were 2% and 4%, respectively. The issuer was Eugene Investment & Securities. The conversion request period was from August 10 this year to July 10, 2026. The maturity date is August 10, 2026.
When Hyeongji I&C issued the 8th series CB, the stock price was in the 1,000 KRW range. However, the stock price continued to decline and even dropped to 520 KRW on August 5 this year. As a result, the conversion price was adjusted to the lowest level. In particular, the stock price continued to fall below the conversion price, recording 509 KRW on the 3rd of this month.
However, the situation changed after the December 3 emergency martial law incident. Following the emergency martial law, the impeachment political turmoil highlighted Hyeongji I&C. The company has been regarded as a beneficiary stock of the free education policy announced by Lee Jae-myung, leader of the Democratic Party of Korea, during his tenure as governor of Gyeonggi Province. Due to this influence, the stock price hit the upper limit for two consecutive days on the 9th and 10th of this month. On the 11th, it even rose to 1,417 KRW during trading.
From Hyeongji I&C's perspective, the exercise of conversion rights this time also reduced financial burdens. As of the third quarter of this year, the company's cash and cash equivalents amounted to only 59.643 million KRW.
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