This article was published on May 14, 2025, at 5:00 p.m. on the ChosunBiz MoneyMove site.
COSMO AM&T, which recorded a loss in its primary business of the institutional sector, is pushing ahead with the issuance of convertible bonds (CB) worth 200 billion won. It seems to be seeking a large-scale influx of funds due to declining performance in the electric vehicle market.
According to investment banking (IB) industry sources on 14th, COSMO AM&T is in discussions with multiple private equity fund (PEF) operators regarding the CB issuance. The issuance size reaches 17% of COSMO AM&T's market capitalization (1.1931 trillion won), which is also the maximum issuance amount stipulated in the company's articles of incorporation.
COSMO AM&T's performance is worsening. In the first quarter of this year, it recorded a consolidated revenue of 113.9 billion won and an operating profit of 1 billion won, which represents a decrease of 6.7% and 80.3%, respectively, compared to the same period last year. The operating profit is significantly below the average forecast (consensus) of 4 billion won from securities firms.
In particular, it is particularly painful that the institutional sector recorded an operating loss for the first time since the COVID-19 pandemic. Compared to last year's third-quarter performance, which had recorded the lowest quarterly revenue to date yet sustained a profit, the struggles in its primary business become evident.
Park Hyung-woo, an analyst at SK Securities, noted, "The front-end clients have seen a decrease in revenue due to tariff uncertainties, and their adjusted material and parts procurement strategies by region have worsened performance. This impact is expected to persist into early to mid-second quarter."
Due to the contraction in front-end demand, the order scale is also declining. COSMO AM&T announced last month that the scale of the NCMA (nickel, cobalt, aluminum) cathode material supply contract signed with LG CHEM last July has been reduced from 362.1 billion won to 250.4 billion won, a decrease of 30.8%. COSMO AM&T has been supplying the cathode active materials that have undergone first sintering to LG CHEM.
◇ Financial structure relatively sound compared to competitors... CB issuance potential
COSMO AM&T appears to be in a relatively sound financial structure compared to its cathode material production competitors, making external funding feasible. As of the first quarter of this year, its debt ratio and net borrowing ratio stand at 33% and 42%, respectively, which are better than those of POSCO FUTURE M (58% and 125%), which recently initiated a capital increase of 1.1 trillion won.
However, COSMO AM&T is in a situation exposed to downward pressure on its stock price, so the CB issuance could potentially exacerbate the stock decline. There are projections in the securities industry that COSMO AM&T is likely to be excluded from the KOSPI 200 index rebalancing scheduled for next month on the 13th.
Shinhan Investment Corp. predicted last month that COSMO AM&T, along with Doosan Fuel Cell, LX International, SK Networks, Hansei Industry, SAM-A ALUMINIUM, and ILJIN Hysolus, would be excluded from the KOSPI 200. Researcher Jo Min-kyu said, "The excluded stocks faced a downward trend from 30 trading days before to 15 trading days after the rebalancing date."
A COSMO AM&T official stated, "While it is true that we need funds for overseas investments or plant expansions, borrowing would still be the priority even if we raise funds," noting, "We cannot confirm whether CB issuance will take place."
COSMO AM&T, integrated into the COSMO Group in 2010, engages in the manufacturing and sale of functional films, cathode active materials for secondary batteries, toners, and toner imaging materials. The largest shareholder is COSMO Chemical, which holds a 27.19% equity stake. The ownership structure follows a chain from Chairman Heo Kyung-soo of COSMO Group to COSMO & Company, COSMO Chemical, and lastly COSMO AM&T.