Hyungji Global's Stock Surged as a Lee Jaemyung-Related Stock
Retreats After Hitting 13,050 Won on April 4
SK Securities to Acquire Any Remaining Shares
The stock price of Hyungji Global, which is in the process of raising funds through a new share issuance, has been declining for several consecutive days. The stock had previously surged after being linked as a related stock to Lee Jaemyung, a preliminary presidential candidate from the Democratic Party, but its trend reversed following news of a large-scale exercise of convertible bonds. If the weak stock price trend continues, it could also affect the rights offering. Some have expressed concerns that SK Securities, which has signed a standby underwriting agreement, may be left with unsold shares.
According to the financial investment industry on April 24, Hyungji Global's stock price fell 51.6% over 13 trading days after reaching a yearly high of 13,050 won on April 4. Among political theme stocks, there has been a concentration on policy-related stocks, resulting in relatively weak performance for stocks associated with acquaintances. From March 24 to April 4, the stock price nearly quintupled, but it has since given back about half of those gains.
Hyungji Global is currently conducting a rights offering to raise 20.5 billion won by issuing 6 million new shares. The expected issue price per share is 3,420 won, and the first issue price will be determined on April 30. The final issue price will be set on June 12, and existing shareholders will be able to subscribe from June 16 to 17. If there are any unsubscribed shares, a public offering for general investors will be held from June 19 to 20. Any remaining shares after this process will be acquired by SK Securities. SK Securities will receive a 15% fee on the amount of standby underwriting for any shares it acquires in the Hyungji Global rights offering.
Since the subscription schedule is set after the early presidential election on June 3, it is difficult to predict whether the offering will be successful. The greater the difference between the issue price and the market price, the more likely it is that funds will be attracted for the subscription of new shares. Typically, the prices of political theme stocks tend to return to normal after the presidential election. A financial investment industry official explained, "After the election, regardless of the outcome, interest in presidential theme stocks is expected to decline," and added, "If Hyungji Global wants to increase the subscription competition ratio, it will need to actively communicate how it will use the raised funds to enhance corporate value."
Hyungji Global plans to use the raised funds for debt repayment, facility investment, and overseas market expansion. The company intends to allocate funds to expand its overseas licensing business and optimize its overseas supply chain. In the context of ongoing tariff disputes between the United States and China and growing concerns about economic contraction, it is necessary to present concrete plans to persuade existing shareholders.
Even if there are unsold shares, Hyungji Global can secure at least 17.5 billion won, as SK Securities will acquire them. The largest shareholder, Fashion Group Hyungji, will subscribe to 30% of its allotted new shares, contributing approximately 2.2 billion won based on the expected issue price. Even if the subscription competition ratio among existing shareholders remains at the lowest level, SK Securities will acquire the remaining shares and Hyungji Global will complete its fundraising.
Depending on the results of the general public offering, SK Securities may be required to invest more than 10 billion won in Hyungji Global's capital increase. The larger the amount of unsold shares acquired, the greater the potential for losses. In 2022, KB Securities incurred losses after acquiring unsold shares from Engchem Life Sciences.
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