Share prices of Inventage Lab and d'Alba Global, for which lockup agreements (restrictions preventing major shareholders, executives and employees, and institutional investors from selling shares for a certain period after listing) are being lifted on the same day this month, are sharply diverging. Investors' calculations are becoming more complicated.
While the lifting of lockups typically raises overhang (potential sell volume) concerns in the market, a variety of factors—such as price trends and the equity ratio of major shareholders—that existing shareholders consider means share prices do not necessarily fall when lockups end. That is why some say investors should check whether the unlocked shares are likely to actually hit the market and examine growth potential and other factors across the board.
Inventage Lab, a KOSDAQ-listed company, is set to see the lockup obligation lifted on the 22nd for a volume equivalent to 15% of total shares outstanding, yet the stock is surging. After moving in the 10,000–20,000 won range for two years following its listing, Inventage Lab shares have jumped 212.68% this year (Jan. 2–Nov. 20). On the 19th, the stock was designated as an investment warning issue after a short-term spike.
Inventage Lab's largest shareholder and key executives, who pledged an unusually long three-year lockup on their holdings at the time of listing, are in a position to realize sizable gains.
Inventage Lab closed at 66,600 won on the 20th, which is 455% above the offering price (12,000 won) at listing. If the price holds at the current level after the lockup is lifted, a simple calculation suggests a profit of 54,600 won per share.
However, both inside and outside the company, there is a view that the largest shareholder is unlikely to immediately sell its equity. As of the end of June, the largest shareholder's equity ratio stood at a relatively low 13.66%.
On top of that, the company issued 39 billion won in convertible bonds (CB) last year to raise operating funds. As the stock price surged, bondholders have been filing for conversion one after another, and if the converted shares are additionally listed, the largest shareholder's equity ratio will fall further. To maintain stable control, the largest shareholder is in a position to secure more equity instead.
An industry official said, "Although the lockup obligation has disappeared, if it is difficult for the largest shareholder to sell equity, one can judge that overhang concerns are not significant."
The recent surge in Inventage Lab's share price is thanks to the rapid growth of the global anti-obesity drug market. The company's long-acting injectable under development has drawn attention as a next-generation drug delivery platform, and expectations are high for a technology transfer deal with global big pharma.
d'Alba Global will also see a lockup volume exceeding 10% of total shares outstanding lifted on the same day. But unlike Inventage Lab, d'Alba Global's share price has been weak amid overhang concerns coupled with worries about earnings.
d'Alba Global's current price (133,300 won) is more than double the offering price (66,300 won), but it has not recovered the early listing peak (247,500 won).
Earnings that fell short of market expectations hit the stock directly. d'Alba Global posted 29.2 billion won in operating profit on a consolidation basis in the second quarter of this year (Apr.–Jun.), missing market forecasts by 19%, while absorbing two batches of institutional investors' lockup shares (about 35%) in June and Aug.
Third-quarter (Jul.–Sep.) results also failed to meet market expectations. d'Alba Global's third-quarter revenue was 117.3 billion won and operating profit was 16.7 billion won, falling short of securities firms' forecasts by 4% and 31%, respectively. On concerns over deteriorating profitability, the share price plunged 20% in a single day on the 6th.
d'Alba Global moved to minimize overhang concerns through a large dividend. When deciding on the large payout, it set the record date (the 26th) just after the lockup end date (the 22nd). If investors seeking dividends hold shares through the 26th, the market can absorb the volume coming out due to the lockup expiration.
d'Alba Global disclosed on the 18th that it decided on an interim dividend of 2,226 won per share. Structured as a reduction dividend funded by transferring capital reserves to retained earnings, the payout is excluded from taxation, effectively raising the real payout ratio.