Heng Sheng Announces 16.8 Billion KRW Third-Party Allotment… Massive Dilution Risk and Operating Fund Purpose

Heng Sheng resolved on June 23, 2026 to issue 28,000,000 new shares through a third-party allotment. The issue price is 600 KRW per share, raising a total of 16.8 billion KRW, which will be used for operating funds.
This capital increase causes massive dilution of approximately 114.7% relative to the existing 24,404,704 shares, with the raised amount exceeding the current market capitalization of 13.59 billion KRW. However, the new shares are subject to a one-year lock-up period, limiting immediate selling pressure.
The third-party allottees are Hui Mei Nga, a related party of the largest shareholder receiving 20,000,000 shares, Liu Huan receiving 5,000,000 shares, and Hui Ka Shing receiving 3,000,000 shares, all individual investors. Additionally, the company plans a 5:1 reverse stock split on July 24, 2026 prior to the capital increase.
The funds will be used over three years for purchase costs of 6.72 billion KRW, marketing costs of 6.72 billion KRW, and R&D costs of 3.36 billion KRW, representing a defensive capital allocation aimed at sustaining operations.
[AI Summary]Heng Sheng's capital increase involves massive dilution exceeding market cap, severely impairing existing shareholder value. The operating fund purpose indicates defensive rather than growth-oriented use, and the third-party allotment to individuals including a related party raises governance concerns. This is likely to exert downward pressure on the stock price.