After the financial authorities signaled their intent to delist "penny stocks" (shares priced under 1,000 won), more listed companies have moved to prop up their share prices artificially. A prime example is reverse stock splits. Against that trend, however, Jaeyoung Solutec, a KOSDAQ-listed company, has drawn attention for taking the opposite approach by deciding on a reverse split after it had already moved firmly out of penny-stock territory this year.
Jaeyoung Solutec's recent share-price rise came thanks to being tied to the "robot theme stocks." Expectations that the company's camera actuators can be used in robots lifted the stock. Early this year, the share price topped 8,000 won, but it has since slipped somewhat. On the 16th, Jaeyoung Solutec closed around 3,000 won.
The robot theme lit the fuse for the rally, but inside and outside the company, some said that restructuring the business over the past few years and wrapping up succession early laid the groundwork for a re-rating.
As recently as September last year, Jaeyoung Solutec was a penny stock that failed to reach 1,000 won. Under the government's recently announced "penny-stock delisting" plan, which stresses revitalizing the KOSDAQ market, Jaeyoung Solutec faced a not-insignificant risk of delisting. But starting late last year, the share price climbed above 1,000 won and gained momentum.
Inside and outside the company, some noted that Jaeyoung Solutec's business restructuring and resulting earnings improvements have begun to be reflected in the share price. Originally a mold manufacturer, Jaeyoung Solutec, in Aug. 2024, halted operations of its legacy mold division through a business reorganization and made production and sales of actuators—core components for smartphone cameras—its main business.
In particular, Jaeyoung Solutec can produce a wide range of high value-added actuator product lines such as VCM (Voice Coil Motor), encoder, and OIS (Optical Image Stabilizer), allowing it to respond flexibly to changes in smartphone specifications, and it maintains a stable relationship with Samsung Electronics.
Moon Ji-hye, an analyst at NICE Information Service, said, "Jaeyoung Solutec has research and development and production capabilities to manufacture high-performance camera module actuators."
The company said, "Given the nature of downstream industries, the structure is continually affected by changes in market demand, generational shifts in products, and cost competition," adding, "Along with top-line growth, we are also focusing on strengthening fundamentals such as Production yield stabilization, productivity improvement, and enhanced quality response."
Jaeyoung Solutec once operated a production base in the Kaesong Industrial Complex, but after inter-Korean relations deteriorated, it halted those facilities and established an alternative production base in Vietnam. The Namdong Industrial Complex in Incheon, where it previously made mold products, was sold in Oct. 2024 to raise needed funds.
Founder Chairman Kim Hak-gwon still works on the front lines of management, but naming eldest son CEO Kim Seung-jae as co-CEO and completing succession early also improved governance stability.
In 2021, Chairman Kim Hak-gwon gifted his holdings in the company to Jaeyoung I-Tech, a private firm 76% owned by CEO Kim Seung-jae. As of the end of September last year, Jaeyoung I-Tech was the single largest shareholder with 9.12% of Jaeyoung Solutec's equity. CEO Kim Seung-jae also holds 5.68% of the company's equity.
In the industry, some say CEO Kim Seung-jae's management acumen, after inheriting control, is translating into improved results. The company's operating profit, which was around 5 billion won in 2022, increased to 7 billion won in 2023 and about 10 billion won in 2024.
As the share price has risen recently, convertible bonds (CBs) issued four to five years ago are being converted one after another. That followed a sharp rally earlier this year as a "robot theme" craze swept the stock market. While CB conversions have acted as a headwind for the share price, they appear to be absorbed relatively smoothly.
In particular, the company moved to support the share price last month by approving a 5-to-1 reverse stock split. Under the decision, the par value per share will change from 500 won to 2,500 won. The total number of issued shares will fall from roughly 116.89 million to about 23.38 million.
The company said, "Among listed firms, it is very rare to have more than 100 million shares outstanding," adding, "This decision is to streamline the share structure more efficiently and create a stable stock transaction environment."
However, some point out that governance is somewhat vulnerable because the largest shareholder's equity is around 16%. In response, the company said, "We recognize market concerns stemming from the largest shareholder's low equity," adding, "Under the current governance, we are working to ensure stable management and enhance corporate value."