A convertible bond (CB) bomb was dropped on Sangji Construction for the second consecutive trading day. Following the exercise of conversion rights amounting to 2.3 million shares, which is 57.7% of the issued shares, another 100,000 shares will have their conversion rights exercised.
Sangji Construction announced through the Financial Supervisory Service electronic disclosure system on the 21st that 100,000 shares will be newly listed due to the exercise of conversion rights for the 20th issue of non-guaranteed private convertible bonds without a name. The new stock is scheduled to be listed on the 22nd of next month.
This exercise of conversion rights occurs for the second consecutive trading day following the exercise that took place on the previous trading day, the 18th. With two large-scale exercises of conversion rights taking place in succession, it is expected to have a negative impact on stock prices due to the significant increase in shares issued.
Sangji Construction's stock rose sharply as it recorded ceiling prices for 10 consecutive trading days after being linked to Lee Jae-myung, a candidate for the Democratic Party of Korea’s presidential primary. Before being identified as a theme stock, Sangji Construction's stock price was in the 3,000 won range, but it surged to 43,400 won on the 17th, more than a tenfold increase. Accordingly, it appears that CB investors are following up with the exercise of conversion rights to realize profits.
However, with the ongoing exercise of conversion rights, stock prices, which had been inflated by the theme stock craze, are expected to decline rapidly. Following the news of the exercise of conversion rights for 2.3 million shares reported on the 18th, Sangji Construction's stock price fell by 25.1% on the 21st.