Shares of the solar and petrochemical company Hanwha Solutions fell in early trading on the 27th. Investor sentiment appeared to deteriorate sharply after the company released a large rights offering the previous day.
As of 9:23 a.m. that day, Hanwha Solutions was trading at 33,950 won, down 2,850 won (7.74%) from the previous session.
On the 26th, Hanwha Solutions released a rights offering worth 2.4 trillion won, citing financial burdens and investment in new businesses. Shares of Hanwha Solutions plunged more than 18% in response, and the stock remained weak for a second straight day.
The number of shares will increase significantly through the rights offering, raising concerns that the value of existing shareholders' equity could be diluted. The Financial Supervisory Service also classified Hanwha Solutions' rights offering as a key review case, given its trillion-won scale, and plans to scrutinize it closely.
Lee Jin-ho, an analyst at Mirae Asset Securities, said, "If 72 million new shares are issued on top of the existing 171.89 million shares outstanding, the equity held by existing shareholders will be diluted by about 41.9%. While the balance sheet improvement is positive, the negative impact of equity value dilution from the new share issuance is greater." He then lowered his investment rating from "buy" to "neutral" and cut his target price from 46,000 won to 38,000 won.