Enchem Shares Plunge Over 80% in a Year... CB Burden Mounts

From 360,000 Won Last Year to 50,000 Won This Year, Down 84%
CB Balance at 250 Billion Won... First Quarter Cash Equivalents Only 25.9 Billion Won

Enchem's stock price has plunged by more than 80% in just over a year, heightening concerns over its convertible bond (CB) obligations. This is due to the significant gap between the conversion price and the current share price, as well as the company's ongoing losses. The remaining balance of outstanding CBs amounts to as much as 250 billion won.

According to the Korea Exchange on June 19, Enchem closed at 56,300 won the previous day. This is close to its lowest point of the year. On June 18, Enchem hit its yearly low at 53,800 won. Compared to its all-time high of 365,500 won recorded on April 11, 2024, the stock has dropped by 84.60%.

The primary reason is the global slowdown in the electric vehicle market due to a temporary demand stagnation, which has also led to a deterioration in Enchem's performance. Enchem is a company specializing in secondary battery materials, mainly producing electrolytes. On a consolidated basis, its revenue has continuously declined from 509.8 billion won in 2022 to 424.7 billion won in 2023, and 365.7 billion won in 2024.

Operating profit has also remained in the red, except for 2022 and 2023. Last year, the company posted an operating loss of 65.3 billion won. The first quarter of this year was also weak. Sales for the first quarter were 68.2 billion won, down 12.7% year-on-year, and the company posted an operating loss of 19.2 billion won, continuing its deficit.

This situation is particularly burdensome for Enchem, which had raised large-scale funds. As of the first quarter of this year, the total amount of outstanding CBs was 291.95799 billion won.

This includes 11th CB at 11.8 billion won, 12th CB at 22 billion won, 13th CB at 20 billion won, and 14th CB at 238.15799 billion won. Among these, the put option (early redemption right) was exercised for the 11th and 12th CBs. As a result, the remaining balance for the 11th CB is 800 million won, and for the 12th CB, it is zero.

Nevertheless, more than 250 billion won in CBs remain outstanding. The most concerning is the 14th CB. Its conversion price is 112,640 won, which is more than twice the current share price. The early redemption right for this CB can be exercised starting November 29, 2026.

As of the first quarter of this year, Enchem's cash and cash equivalents stood at 25.9 billion won. At the end of last year, this figure was as high as 102 billion won, but it has since decreased sharply. If there is no improvement in the share price or performance by the time the early redemption right can be exercised, Enchem will inevitably face greater financial pressure.