APR(278470) The stock price looks unusual. In a volatile market, it has risen 40% as of the 26th compared with when it fell to 315,000 won on the 30th of the previous month. Even compared with the KOSPI's recovery over the same period, the climb is about twice as steep. On the 25th, it jumped more than 7% in a single day while the KOSPI was undergoing a correction.
With the stock of a company that has warned of bad news rising, attention is focusing on the background. On the 27th, the lockup on 12,350,970 APR shares will be lifted. That is 33% of the total shares outstanding (37,438,155 shares). The 2-year-and-6-month mandatory holding commitment imposed under the Korea Exchange main board listing rules at the time of its Feb. 27, 2024 listing is expiring. Usually, when this volume is released at once, the stock price tends to be pressured by overhang (potential large-scale selling) concerns. The end of a lockup is seen as management taking profits, followed by a steep drop in the stock price.
This time, however, that formula is not working. Why? Of the 12,350,970 shares coming off lockup, 11,953,660 shares are the personal equity of founder and CEO Kim Byung-hoon. That is 96.8% of the total. The remaining roughly 400,000 shares belong to Executive Vice President Shin Jae-ha. In essence, the "supply bomb" is basically the stake of a single founder. This is different in nature from the usual overhang in which a financial investor (FI) retrieves funds at maturity. From the start, Kim voluntarily agreed to a 2-year-and-6-month lockup, much longer than the mandatory holding period (six months) at listing.
Above all, Kim has an incentive to hold the shares: dividends. APR held a board meeting on the 16th of the previous month, about a month before the lockup ends, and decided on an interim dividend of 2,500 won per share, totaling 93.6 billion won. It is the second straight year. The company has a policy to return at least 25% of consolidated adjusted net income to shareholders over the three years from 2024 to 2026. In practice, it bought back 90 billion won worth of treasury shares and canceled all of them, and paid a 134.3 billion won interim dividend last year and a 56.2 billion won settlement of account dividend in April this year.
Applying this interim dividend to Kim's 11,953,660 shares alone amounts to about 29.9 billion won in dividend income. Adding the 17.9 billion won received from the April settlement of account dividend of 1,500 won per share brings this year's total to 47.8 billion won. The more equity is sold down, the more this income decreases. At a second-quarter earnings conference call on the 5th, Executive Vice President Shin Jae-ha also said, "CEO Kim Byung-hoon is not interested in selling shares," adding, "There does not appear to be a large block deal that people are worried about." He added that if there are any plans to sell, the company will communicate with the market in advance.
Some say earnings have helped fend off supply concerns. APR's second-quarter revenue was 767.5 billion won and operating profit was 190.6 billion won, up 134% year over year, respectively. Cumulative first-half revenue of 1.3609 trillion won is close to last year's full-year revenue of 1.5273 trillion won. The share of overseas revenue has risen to 92%, and North American revenue surged 264.6% to 376.3 billion won.
In the securities industry, some analyses say the stock is undervalued given this level of growth. The fact that new markets, including Europe, are opening in earnest is also cited as a reason. An APR official said, "As attention shifts to other sectors due to a weakening semiconductor supply-demand balance, we view internally that positive assessments have been applied to companies with strong growth potential even within cosmetics."