Meritz Securities said on the 2nd that a filing by Spear stating it secured a 10% equity stake in a nickel smelter could produce a direct effect of about 180 billion won. It did not provide a target price or investment opinion. Spear's closing price in the previous session was 14,690 won.
On Dec. 31 last year, Spear acquired a 10% equity stake in EII, which operates and sells output from an Indonesian nickel smelter owned by global nickel mining group NIC. Of the $240 million needed for the equity acquisition, $210 million (the first interim payment) excluding the down payment already paid was raised from overseas investors through acquisition financing, and the company decided to provide 1.8 million treasury shares to NIC as collateral for the second interim payment and the balance.
Jeong Ji-su, an analyst at Meritz Securities, said, "It is the best-case scenario in that the business will proceed without fundraising that dilutes equity, such as a paid-in capital increase or convertible bonds."
Jeong analyzed that with this investment by Spear, the company can stably procure nickel materials and supplies, a strategic mineral, thereby further strengthening Spear's capability to manage supplies of special alloys for aerospace. The ENC smelter located in the Morowali Industrial Park in Indonesia is a large smelter that produces 72,000 tons of nickel and cobalt annually, with Tsingshan Group and NIC participating jointly.
Jeong said, "Considering 7,200 tons per year corresponding to Spear's 10% equity and the London Metal Exchange nickel price of $16,646 per ton, a direct effect of about 180 billion won or more is expected," adding, "Additional revenue generation is also likely in the Super Alloy manufacturing and distribution process."
This year is rich with events in the global space industry, including the U.S. Artemis Mission II, SpaceX's push for an initial public offering (IPO), and Starship's Mars launch. Jeong said, "From the point Starship enters mass production, the intensity of benefits for Korea's companies in the SpaceX value chain is expected to increase."
Jeong added, "Most of Spear's third tranche of convertible bonds appears to have been absorbed, and with additional fundraising risks tied to the nickel smelting business resolved, it will have a positive impact on the stock price."