Riding the 'Honam Semiconductor' wave, 10 consecutive daily limit-up surges and stock price jumps fivefold... What happened to KUMHO ELECTRIC, INC.? [Why the Stock Market]

[Financial News] The stock price of KUMHO ELECTRIC, INC., classified as a 'Honam semiconductor' theme stock, has jumped nearly fivefold in just over two months. During this period, it hit the daily upper limit 10 times, and daily trading volume exceeded twice its market capitalization.
KUMHO ELECTRIC, INC. focuses on the lighting business, including light-emitting diodes (LEDs). To date, no business projects, orders, or investment plans directly related to the Honam Semiconductor Cluster have been confirmed in the company's public disclosures. During the rise in the stock price, the Korea Exchange (KRX) issued a series of market warnings, and recent disclosures also included changes in the major shareholder's stake and the exercise of conversion rights for convertible bonds (CBs).
According to the Korea Exchange (KRX) on the 12th, KUMHO ELECTRIC, INC. closed at 12,450 won on the securities market the previous day. The stock price, which was 2,500 won on June 24, rose 398%. During the same period, the market capitalization also increased by approximately 123.1 billion won, rising from 30.94 billion won to 154.08 billion won.
KUMHO ELECTRIC, INC. recorded the daily limit for three consecutive trading days from June 25 to 29. It also surged by 29.96% and 29.94% on July 6 and 8, respectively. In August, it recorded the daily limit for three consecutive trading days again from the 11th to the 13th, followed by gains of 29.97% and 29.93% on the 20th and 28th, respectively. Since the end of June, there have been 10 instances of hitting the daily limit.
Trading volume also surged rapidly. On the 28th of last month, the trading volume was recorded at 25.74 million shares, with a trading value of 253.2 billion won. On the 31st, 27.49 million shares were traded, and the trading value soared to 341.4 billion won. This means that approximately 2.2 times the number of listed shares (12,376,016) changed hands in a single day. The trading value on that day exceeded double the market capitalization of 154.5 billion won based on the closing price.
On the 1st as well, 16.25 million shares worth 220.8 billion won were traded. On that day, the stock price rose to 14,350 won during trading, recording its highest price of the year.
Along with the steep rise in stock prices, market warnings followed in succession. KUMHO ELECTRIC, INC. was designated as an investment warning stock on January 20 and June 30. In August, following two advance notices of investment warning designation, the company was designated as an investment warning stock again on the 31st. Notably, the closing price on the 13th had risen by more than 100% compared to three trading days prior and more than 60% compared to five trading days prior.
As stock price volatility increased, a request for disclosure was also made. On August 13, the Korea Exchange (KRX) requested a disclosure regarding significant market fluctuations, but the company responded the following day, stating, "There are no material disclosure matters currently in progress or confirmed under disclosure regulations."
Concentrated trading by a specific account was also detected. On June 29, a specific account classified as an individual net purchased 1,561,474 shares. This amounted to 2.52% of the total listed shares at the time. KUMHO ELECTRIC, INC. was designated as a stock requiring investment caution due to being a "top stock by single-account trading volume."
On August 21, similar transactions occurred in a specific account classified as other corporations. The account purchased 263,853 shares and did not sell any. This amounts to 2.13% of the total listed shares.
KUMHO ELECTRIC, INC. has recently attracted market attention as a so-called 'Honam Semiconductor' related stock, coinciding with expectations for fostering the semiconductor industry in the Honam region. However, according to its periodic report, its main businesses are general lighting and LED lighting. In the first half of this year, consolidated sales amounted to approximately 18.7 billion won and operating losses were approximately 1 billion won, with LED lighting and discharge lamps accounting for about 99% of sales.
Following the surge in stock prices, changes that could affect supply and demand also occurred. On the 1st, related parties of the largest shareholder sold a total of 342,851 shares on the open market. As a result, the shareholding ratio of Shinju Holdings and its related parties decreased from 32.60% to 29.83%.
Conversion requests for CBs also continued. KUMHO ELECTRIC, INC. disclosed on the 8th that conversion rights were exercised for CBs totaling 900 million won, including 500 million won on the 2nd and 400 million won on the 7th. The conversion price is 5,986 won per share, and a total of 150,350 shares are scheduled to be issued. The closing price of 12,450 won on the 11th is approximately 2.1 times the conversion price.
The securities industry points out that rather than evaluating this week's surge solely based on the "Honam Semiconductor" theme, one must examine whether actual changes in corporate value are accompanying it. An industry insider stated, "While the formation of a theme itself can serve as a basis for a stock price increase, whether there has been a change in corporate value sufficient to warrant a nearly fivefold rise in just over two months is a separate matter." He added, "Especially given that the company stated in an inquiry that there were no material disclosure matters, investors must verify the gap between expectations and actual business operations if the stock price and trading volume have surged."
Another official added, "The fact that the majority shareholder's stake decreased and the CB conversion rights were exercised at a level significantly exceeding the conversion price during a period of surging stock prices is also something to consider from a supply and demand perspective," and "Ultimately, it is important to see whether future actual earnings and business performance can support the current corporate value."
[email protected] Choi Doo-sun Reporter