As JS Link, a KOSDAQ-listed company formerly known as DNA Link, pushes into the permanent magnet business and its stock price soars, some warn it could repeat the path of SEONG AN Materials, whose shares once whipsawed on a similar theme. That is because JS Link's current largest shareholder and management previously tried and failed to advance a similar permanent magnet business at SEONG AN Materials. SEONG AN Materials was also a place where a figure tied to the past "YoungPoong Paper stock manipulation case" took part in management.
JS Link's share price surged steeply after it announced a move into the permanent magnet business last year. Starting in the 5,000 won range at the top of the year, the stock at one point in September topped 25,000 won, and it is still trading around 20,000 won.
Rare-earth permanent magnets are a key material used in more than 80% of electric vehicle drive motors, with stronger magnetic force and higher durability than ordinary magnets. Because most of the raw material mines are concentrated in China, supply chain risk is high, and from raw material procurement to production, the field demands advanced technological capability.
For this reason, market skepticism is growing about small and midsize companies with no related base jumping into new businesses. Even amid this controversy, however, JS Link is pushing ahead by raising large sums through issuance of convertible bonds (CB) and paid-in capital increases.
JS Link drew attention in particular after bringing on Japan's Kenji Konishi, who it said had built experience in the rare-earth business, as an executive and announcing plans to establish a permanent magnet plant in Malaysia. In the process, news that a Malaysian government official visited JS Link's Yesan plant further fueled the stock's rise.
But some voices warn of investment risk, noting that JS Link's largest shareholder, "Jusung C&A," also pursued a permanent magnet business in the past through SEONG AN Materials (formerly SEONG AN).
SEONG AN Materials previously touted permanent magnets as a new business and saw its share price soar. The fact that it pursued the new permanent magnet business even as losses persisted and cash flow was weak is seen as resembling JS Link's current situation.
SEONG AN Materials signed a rare-earth oxide supply contract with U.S.-based MP Materials in 2023 and announced last year that it had succeeded in localizing rare-earth metal bars with 98% or higher purity. Each time the stock surged, the company repeatedly raised funds, and in the process, the then-largest shareholder reduced its equity stake and effectively exited.
But contrary to the splashy announcements, there was no actual sales or revenue generated from the business. The company's main business still remains in its core fabric manufacturing and wholesale segment. The share price, which had been below 1,000 won, jumped into the 2,500 won range after Daeho Technology acquired the company and touted a new rare-earth business, but once it became clear the business lacked substance, the stock plunged again and remains sharply lower.
Investors are focusing on the fact that JS Link's largest shareholder and parts of its management were linked to SEONG AN Materials in the past. JS Link's largest shareholder, Jusung C&A, closely cooperated with the unlisted Daeho Technology, then the largest shareholder of SEONG AN Materials, to support the rare-earth business. Jusung C&A personnel Heo Yong-ho and Choi Ho-gwan served as directors of SEONG AN Materials at the time, and Chief Executive Lee Jun-young and Director Kenji Konishi, who are leading JS Link, were also members of SEONG AN Materials' board.
Tracing the equity structure back makes the relationships even more complex. Daeho Technology, the then-largest shareholder of SEONG AN Materials, was a 100% subsidiary of the unlisted Daeho Hi-Tech. Daeho Hi-Tech was the largest shareholder of Daeho AL, a company listed on the Korea Exchange main board; later, Daeho Hi-Tech sold its holdings to Vidente, and the largest shareholder of Daeho AL was changed again to Biz Alpha.
What stands out is the identity of Biz Alpha. Biz Alpha is headed by Kim Eon-jung, who was arrested in connection with the "YoungPoong Paper stock manipulation case." Kim also previously served as an outside director at SEONG AN Materials, and the timing of the appointment coincided with when Jusung C&A-affiliated personnel entered SEONG AN Materials' board. In the end, the key figures who moved the share price at SEONG AN Materials under the pretext of a new business are now positioned as-is at JS Link.
"When a company says it is entering a field that requires advanced accumulation of technology and then highlights cooperation or MOUs with prominent corporations to raise funds, investors should exercise particular caution," said a person in the investment industry.