LS SECURITIES noted that despite having assets that can be sold, Samsung SDI chose a paid-in capital increase. It lowered the target share price from 195,000 won to 165,000 won and suggested a 'neutral' investment opinion. On the most recent trading day, 14th, Samsung SDI's closing price was 191,400 won.

View of Samsung SDI Giheung Plant /Courtesy of Samsung SDI
View of Samsung SDI Giheung Plant /Courtesy of Samsung SDI

On the 17th, Jeong Gyeong-hee, a researcher at LS SECURITIES, said that with this paid-in capital increase, Samsung SDI can secure funding to proceed with a significant portion of its estimated capital expenditure (CAPEX) of about 5 trillion won for this year.

However, Jeong noted, "Despite having saleable assets already held, the decision to adopt a self-financing method is a regrettable aspect from the perspective of equity investors."

On the 14th, Samsung SDI announced it would conduct a paid-in capital increase worth 2 trillion won. Of this amount, 1.5 trillion won will be used for acquiring securities of other corporations, while the remaining 500 billion won will be used for facility funding.

The new share allocation date is set for the 18th of next month, with the planned issuance price set at 169,200 won. The new shares from the paid-in capital increase are expected to be listed on June 19, and the number of common shares is projected to increase by 17.2%.

Researcher Jeong analyzed that, in addition to the dilution impact from the increase in common shares, the choice of financing method for the company's CAPEX may temporarily act as a downside risk for the stock price due to this paid-in capital increase.

Samsung SDI plans to use the 1.5 trillion won raised through the paid-in capital increase for a joint venture with Hungary and U.S. General Motors.

Researcher Jeong warned that, "It is noteworthy that GM plans to sell its stake in the Ultium Cells JV to LG Energy Solution, which it recently established with LG Energy Solution, and that CEO Mary Barra has stated that they are focusing on 'hybrid vehicles' to respond to slower-than-expected market demand growth."