Peptron: Rights Offering of 120 Billion Won

• On 16 August, Peptron (087010 KS) announced that it decided to increase capital through a rights offering worth about 120 billion won, involving 2.64 million shares (12.8% of outstanding shares).

• The expected rights offering price is 45,450 won, which is 22% lower than current price.

• We are negative on Peptron's rights offering mainly due to much lower expected rights offering price, concerns about additional rights offering next 2-3 years, and continued lack of profitability.

Rights Offering of 120 Billion Won Details

On 16 August, Peptron (087010 KS) announced that it decided to increase capital through a rights offering worth about 120 billion won, involving 2.64 million shares (12.8% of outstanding shares). The expected rights offering price is 45,450 won, which is 22% lower than current price.

The number of new shares allocated per share is 0.1244. The new share allocation date of record is 23 September. The new share listing date is scheduled for 18 November. Peptron currently has a market cap of 1.2 trillion won (US$0.9 billion).

Peptron has been a strong outperformer in the past one year and five years. Its share price is up 53% and 403% in the past one year and five years, respectively. Currently, it is the 44th largest stock in KOSDAQ by market cap.

The company plans to use the proceeds from this capital raise for further investments in its core business. The company plans to invest 65 billion won to build a new plant for producing peptide-based sustained-release pharmaceuticals.

The new plant, which will be built in accordance with the current Good Manufacturing Practices (cGMP) of the U.S. Food and Drug Administration (FDA), will be constructed with three floors above ground and a total area of ​​8,000 m2 to produce up to 10 million vials of sustained-release pharmaceuticals per year. Peptron aims to complete the new plant by June 2026.