1. What Happened?: WCP Announces ₩36 Billion Convertible Bond Issuance
On September 8, 2025, WCP announced the issuance of ₩36 billion in convertible bonds. The conversion price is set at ₩7,396, significantly higher than the current stock price of ₩2,575. These funds are intended for operating expenses and repayment of short-term debt.
2. Why?: Deteriorating Performance and the Need for Funding
WCP recorded a sharp decline in sales and a substantial operating loss in the first half of 2025. The global slowdown in the electric vehicle market and intensifying competition are cited as the main causes. Continuing investments, including the expansion of its Hungarian plant, require significant funding. This poor performance raises concerns about WCP’s financial health. The convertible bond issuance appears to be a measure to address this funding shortage.
3. What’s Next?: Share Dilution Risk and Fundamental Improvement
- Potential Share Dilution: If the convertible bonds are converted into shares, the value of existing shareholders’ equity could be diluted. Given the considerable difference between the current stock price and the conversion price, the dilution could be substantial.
- Fundamental Improvement is Key: While the convertible bond issuance provides short-term funding, it is not a fundamental solution. Without improvement in performance and stabilization of the financial structure, stock price recovery will be difficult, and the risk of share dilution will increase.
4. Investor Action Plan: Proceed with Caution and Monitor Continuously
Investors should not be swayed by short-term stock price fluctuations and should closely monitor WCP’s fundamental improvements and the likelihood of convertible bond conversion. Caution is advised for investment at this time, and it is crucial to continuously monitor the company’s management strategy and changes in market conditions.