KOSDAQ listed company Hyungji I&C investors are oscillating between hell and heaven. After announcing a rights offering plan close to its market capitalization, the company's and its affiliates' stock prices plummeted, but recently, due to Lee Jae-myung, the leader of the Democratic Party of Korea, being acquitted, the stock prices have surged again. Hyungji I&C is linked to the Lee Jae-myung theme stock.
As of 2:15 p.m. on the 28th, Hyungji I&C in the KOSDAQ market is trading at 1,446 won, up 15.68% (196 won) from the previous trading day. Hyungji Global has skyrocketed to its upper limit for the second consecutive day, recording 4,730 won. However, Hyungji Elite is trading at 2,425 won, down 6.01% from the previous trading day.
Hyungji Group related stocks, including Hyungji I&C, continue to soar. The news of the stock offering as a theme stock for Lee Jae-myung is the influence. The Hyungji Group related stocks are linked to Lee's free school uniform policy that he promoted during his term as mayor of Seongnam.
From the company's perspective, it's a situation of relief. Hyungji I&C announced that it decided on a rights offering for shareholders amounting to 20.064 billion won on the 21st, prior to the ruling of acquittal for Lee. If the rights offering proceeds as planned, the number of new shares issued will reach 28.5 million, which is about 90% of the existing shares. At that time, Hyungji I&C's market capitalization was about 25 billion won, leading to concerns about the burden of the 20 billion won rights offering and stock value dilution.
Following the news of the rights offering, Hyungji I&C's stock price plummeted. On the 24th alone, it fell nearly 26%, recording a price in the 700 won range. The stock prices of both Hyungji Elite and Hyungji Global also dropped, falling to around 1,700 won and 2,600 won, respectively.
However, the atmosphere changed dramatically when Lee was acquitted in the appeal trial for violating election laws on the 26th. Hyungji Group related stocks have also experienced a surge since the 26th, when the Lee Jae-myung theme stock began to rise sharply. The market has concluded that the judicial risks, which were the biggest obstacles to Lee's presidential run, have essentially been resolved.
On that day, Hyungji I&C's stock price climbed more than 90% compared to the 25th. During the same period, Hyungji Elite also rose more than 48%. Hyungji Global recorded its upper limit again, soaring nearly 70% by that day.
On the 26th, Hyungji I&C acquired bonds with stock acquisition rights before the expiration and immediately resold them the same day. According to the disclosure, the company reached an agreement with creditors to acquire them via an early redemption request. Subsequently, it resold to Eugene Securities on the same day for 1.65 billion won, with an exercise price of 861 won per share.
After the declaration of martial law on December 3, the political turmoil over the impeachment of the president began, leading to stock prices starting to rise from late last year, and conversion requests have followed one after another. Hyungji I&C disclosed that three conversion requests have been made this year alone. Previously, Eugene Securities exercised conversion rights on January 2 and 31, and February 21 this year for the convertible bonds issued in August 2023. The conversion price is 626 won, and a total of 1,744,407 new shares will be issued. Based on the current stock price, this means a profit of 820 won per share.
On January 21, the CEO of Hyungji I&C and eldest daughter of Choi Byung-oh, president of Fashion Group Hyungji, Choi Hye-won, exercised her call option on the third-party convertible bonds. The call option was exercised for the eighth series of non-guaranteed private convertible bonds worth 78 million won issued in August 2023, resulting in the issuance of 124,601 shares.
Hyungji Elite also disclosed the exercise of a third-party convertible bond call option. On the 7th of last month, it exercised the call option for the ninth series of non-guaranteed private convertible bonds issued on February 7 last year, resulting in the issuance of 440,435 shares. The companies that exercised the call options include Fashion Group Hyungji, Hyungji I&C, and Castelbajac (currently Hyungji Global).
Meanwhile, the market anticipates that political uncertainty will continue next week. This is due to the Constitutional Court delaying the announcement of the impeachment ruling date for President Yoon Suk-yeol. Speculation is emerging that the impeachment ruling will take place next month, while a by-election is scheduled for the 2nd of next month. There is also speculation that the ruling will not be scheduled around the election, given the burden of timing the impeachment ruling alongside the election.
A source from the securities industry noted, "The political situation is continuously changing, so the stock prices of political theme stocks are likely to experience significant fluctuations for some time."