SKONEC, POSCO FUTURE M, Hyungji Global, GNCO, RANiX, Bukwang Pharmaceutical, ESR Kendall Square REIT, Hanwha Aerospace, HANSAE MK, Cellid, Zinitix, Haesung Optics, VIVIEN, Samsung SDI.
These 14 stocks have two common points. First, they listed new shares after undergoing a rights offering for shareholders since June this year. Second, there were unexercised rights due to undersubscription during the rights offering, and those who invested in these made profits by "selling rights."
An analysis of 31 stocks that had unexercised rights in this year's shareholder allocation rights offerings showed that selling on the rights sale date was more profitable on average than selling on the new share listing date.
Selling rights, also known as short-selling rights, pre-sale of rights shares, or selling before storage, refers to the act of an investor with the right to receive new shares selling them in advance before they are listed to secure profits. Investors in unexercised rights from shareholder allocation rights offerings can sell rights two trading days before the new shares are listed.
According to the Korea Exchange on the 9th, the average transaction price of POSCO FUTURE M on the 6th was 150,406 won (transaction amount ÷ transaction volume). From that day, investors could sell the rights to the new shares from the rights offering, and considering the new share issuance price of 96,400 won, investors who sold rights that day made about a 56% profit. SKONEC also saw its average transaction price (1,952 won) on the rights sale date exceed the new share issuance price (1,948 won) by about 0.2% on the 8th.
This trend has been ongoing since Samsung SDI listed its new shares from the rights offering in June. It is estimated that if investors had invested in Samsung SDI's unexercised rights and sold rights, they would have made an average revenue of around 15%. Companies like HANSAE MK (48%) and Zinitix (34.4%) and Hanwha Aerospace (30.4%), which saw their stock prices rise significantly after the decision for the rights offering, have much higher expected revenue.
Typically, when a listed company conducts a shareholder allocation rights offering, existing shareholders (old shareholders) often have to bear the burden of stock price declines. This is because the increase in the number of shares outstanding dilutes the value of the shares.
However, in recent times, large companies participating in shareholder allocation rights offerings have had relatively low proportions of newly issued shares. Even on rights sale days when selling pressures increase, stock prices have held steady, leaving room for investors of unexercised rights to benefit.
Another characteristic is that the stock market has been trending upwards recently.
The issuance price of newly issued shares in shareholder allocation rights offerings is determined by applying a discount rate to the arithmetic average stock price reflecting the transaction volume before the subscription of existing shares. The gloomy political scene in the first half of this year, combined with the tariff threats from the U.S. Trump administration, led to poor performance in the Korean stock market. Consequently, the new share issuance price was set lower.
However, as the U.S.-China tariff war entered a truce and the government of Lee Jae-myung was established, the Korean stock market rebounded significantly. Stocks that were conducting rights offerings also saw their prices rise, creating an environment where investors could sell the newly issued shares bought at low prices for a profit.
Broadening the timeline shows that the revenue from unexercised rights investments has been rewarding. An analysis of 31 stocks that had unexercised rights in this year's shareholder allocation rights offerings revealed that the transaction price on the rights sale date was, on average, 13.3% higher than the issuance price. Selling on the new share listing date estimated an average return of 10.8%. Additionally, there were cases where the transaction price on the rights sale date was higher than the transaction price on the new share listing date 58.6% of the time. In simpler terms, it means that selling rights without waiting until the new listing is more advantageous.
Of course, there are exceptions. KOREA ADVANCED MATERIALS saw its new shares listed coincide with significant volatility, hitting the upper and lower limits of price restrictions. If investors had received unexercised rights and sold on the rights sale date, the estimated average revenue would have been 290%, while selling on the new share listing date would yield an estimated average revenue of 485%, which is even higher.
It's also important to remember that selling rights does not guarantee profits. Companies like NEXTURNBIOSCIENCE, Sigetronics, and E8IGHT faced average losses of 6-7% when they received unexercised rights and sold on the rights sale date. This is why it's essential to carefully assess the company's management situation, the intended use of funds obtained from the rights offerings, and the subscription competition among existing shareholders.
With the opening of the alternative exchange NEXTTRADE (NXT), the options for selling have expanded. For stocks traded on NEXTTRADE, rights can be sold not only during regular hours but also during the pre-market (8 a.m. to 8:50 a.m.) and after-market (3:40 p.m. to 8 p.m.).
Investors who only use mobile trading systems (MTS) should check whether their securities firms support the rights selling function on MTS. Among the top 10 securities firms by equity capital, Korea Investment & Securities and Kiwoom Securities do not support rights selling on MTS and must use home trading systems (HTS).