Poongwon Precision, which drew attention for its technology to localize the fine metal mask (FMM), a core OLED material dominated by Japan, listed on KOSDAQ in 2022 but has remained in the red and is holding on with outside capital infusions. After a paid-in capital increase and the issuance of convertible bonds last year, it has decided on another paid-in capital increase.
In particular, the latest paid-in capital increase, which is being carried out through a public offering to general investors, set the issue price for new shares 30% below the market price, hitting the stock directly.
On the 18th, Poongwon Precision(371950) shares fell to the daily limit and slumped to around 4,000 won. It is the lowest price since listing. Poongwon Precision's market capitalization was 134 billion won on the 14th, but the plunge that day cut it to 94 billion won. In effect, a paid-in capital increase to raise 3 billion won wiped out 40 billion won in market value in a single day.
The company said on the 14th that it had decided on a 3 billion won paid-in capital increase through a public offering to general investors. Of the funds raised, 1 billion won will go to operating capital and the remaining 2 billion won will be used to repay debt.
The size of the new share issuance is not large, but the issue was the price. On the 14th, Poongwon Precision closed at 5,880 won, but the company set the new share price at 3,820 won per share. That applies a 30% discount to the reference price.
Typically, when weak subscription is expected, companies issue new shares at a discount to the market price. But a 30% discount is unusual. Sangsangin Investment & Securities(001290) is acting as the lead manager, and if the public offering is undersubscribed, the lead manager plans to take up any unsubscribed shares.
Investors are saying the steep discount on the new share price may reflect uncertainty over the business viability of FMM.
Poongwon Precision is leading the localization of FMM, which had been monopolized by Dai Nippon Printing (DNP) of Japan. In Jul. 2024, it was selected as a performing institution for a national R&D project to develop high-resolution 1,000-ppi FMM for G8.6H OLED, and in Apr. last year it completed the buildout of production equipment for 8th-generation FMM photomasks.
According to the industry, Poongwon Precision has succeeded in developing FMM for 6th-generation OLED substrates that can be supplied to domestic panel makers such as Samsung Display and LG Display(034220), and is said to be preparing for final quality certification and mass production.
Kim Hyun-gyeom, an analyst at KB Securities, said in a Poongwon Precision report released in Dec. last year, "It appears to be on the verge of entering the actual OLED supply chain, beyond simple prototype development," and added, "If it succeeds in mass-supplying FMM for 6th-generation OLED substrates and replaces existing customers, the scale could reach up to 300 billion won."
Still, despite expectations for FMM localization, delays in the mass production timetable have kept it in the red, and it continues to raise funds. Since listing, the company has posted an annual net loss of around 20 billion won every year starting in 2023.
On top of that, some are closely watching next-generation shifts such as digital (mask-less) OLED, which does not use masks to deposit common or emissive layers in displays at all.