LB SEMICON's 49.8B KRW Rights Issue Dilutes Shares by 20.66%: Non-DDI CapEx Aims for Profit Turnaround, but High Debt and CB Overhang Pose Risks
LB SEMICON decided to issue 12 million new shares (20.66% of outstanding) via rights offering at an expected price of KRW 4,150 per share, raising KRW 49.8 billion
KRW 30 billion will be used for facility investment in Non-DDI bumping and backend to fulfill a 10-year MSA with a global top-tier fabless signed in Feb 2026; KRW 19.8 billion for raw material procurement and working capital
Q1 2026 saw an operating profit of KRW 7.6 billion (vs. -KRW 4.0 billion a year ago) and cost ratio improvement to 88.94% (from 100.8% in FY2025), but largely due to lower depreciation from the KRW 121.8 billion impairment in 2025
The largest shareholder and related parties (current 27.24%) plan to fully subscribe, but after the offering, conversion of outstanding CBs (3rd series KRW 14.5B, 4th series KRW 60B) could dilute their stake to 22.44%
As of Q1 2026, debt ratio 146.6%, current ratio 68.7%, cash of KRW 18.5B vs. short-term borrowings of KRW 134.9B; the rights issue is expected to improve debt ratio to 124.6%, but a drop in offer price could limit the effect
KB Securities, the lead underwriter, also acts as GP for the 4th perpetual CB (KRW 60B), creating a conflict of interest; the company has disclosed this and implemented Chinese Wall controls
Revenue concentration on top 2 customers (73.6%), single-source dependency for plating solution (64% of raw material purchases), and structural decline in COF business due to Chinese panel makers' shift to domestic DDI pose supply chain risks
[AI Summary]LB SEMICON aims to improve mid- to long-term profitability by raising capital for Non-DDI facility expansion through this rights issue, but the 20.66% dilution and potential conversion of KRW 74.5B CBs pose significant risk to existing shareholders' value; given weak financials and concentrated customer/supplier risks, investors should proceed with caution
KOSDAQ Filing Information
Filing: [Correction of Description] Securities Registration Statement (Equity Securities)