DB Securities on the 13th called TLB's simultaneous decisions on a paid-in capital increase and a stock dividend a reasonable choice. It maintained a Buy rating and a target price of 100,000 won. TLB's previous closing price was 74,500 won.
TLB said in a filing on the 10th that it plans to issue 2,073,000 new shares in a paid-in capital increase to raise 120 billion won for facilities funding, and to issue 11,795,630 shares in a 1-for-1 stock dividend.
Researcher Cho Hyun-ji at DB Securities said, "The paid-in capital increase ratio reaches 21%, and it appears the stock dividend was paired to defend against the resulting equity dilution and pressure on the share price."
The scheduled listing date for the new shares from the paid-in capital increase is July 27, and the scheduled listing date for the stock dividend shares is Aug. 7. The tentative issue price of 57,900 won for the paid-in increase shares is about a 22% discount from the closing price on the 10th.
TLB plans to use the funds raised from the paid-in capital increase to expand quarterly production capacity (capa, Capa).
Cho said, "At full utilization, the company has faced a growth ceiling because it cannot meet all front-end demand; given that the entire proceeds will go to facility investment, that the investment amount was streamlined to 120 billion won from the previously planned 200 billion won, and that the stock dividend could help offset liquidity constraints stemming from a smaller number of listed shares than rival substrate makers, this is a reasonable decision."
She added that, with concerns about external financing eased, it is time to focus on additional capacity after the expansion and the resulting growth, and maintained the target price at 100,000 won. She said technical adjustments stemming from the increase in the number of shares will be reflected after the ex-rights date on May 29.