A South Korean company specializing in automation equipment for PCB production, Taesung (KOSDAQ：323280), has raised ₩84.6 billion (CNY 422 million or $57.7 million) through the first stage of its rights offering. On December 31, the company announced it had set the initial offering price at ₩18,590 per share, issuing 4.55 million new shares. Although the total fundraising amount fell short of the initial target of ₩96 billion (CNY 479 million or $65.4 million) due to market fluctuations, the funds raised are sufficient to support Taesung’s planned factory expansion.

Factory Expansion for Strategic Growth

The proceeds will primarily be allocated to the construction of a new manufacturing facility in the Cheonan Northern Industrial Complex, located in South Chungcheong Province, Korea. Taesung secured a 33,059㎡ plot of land in September 2024 for ₩19.4 billion ($13.2 million), with plans to complete the acquisition by March 2025. The new facility will focus on expanding PCB production lines and establishing manufacturing capabilities for next-generation equipment, including components for secondary batteries and semiconductor glass substrates.

Taesung aims to enhance its global competitiveness by increasing production capacity to meet growing demand from both domestic and international clients. Notably, 80% of Taesung’s orders come from Chinese customers, which are serviced through its wholly owned subsidiary in Zhuhai, China, established in February 2023.

Rights Offering Challenges and Adjustments

The initial offering price of ₩18,590 per share was 11.9% lower than the preliminary price of ₩21,100, reflecting a downturn in the company’s stock price during the public offering period. As a result, the total funds raised were reduced, prompting Taesung to adjust its financial plans. Originally, Taesung planned to allocate ₩84 billion from the target ₩96 billion offering for facility construction and the remaining ₩12 billion for operational expenses, including ₩6.8 billion for labor costs and ₩5.2 billion for raw materials. However, with the reduced fundraising amount, labor costs were adjusted to ₩5.9 billion, and the raw materials budget was removed entirely.

Shareholder Participation and Implications

The participation of Taesung’s largest shareholder, CEO Kim Jong-hak, is a crucial factor in the success of the rights offering. Kim, who holds a 24.53% stake, has committed to subscribing to new shares up to a limit of ₩2.4 billion (CNY 12 million or $1.6 million). However, this represents only a fraction of the newly issued shares, raising concerns about potential shareholder dilution.

Following the rights offering, Kim’s stake is expected to decline to 21.23%, with the combined stake of related parties falling from 40.76% to 35.28%. Analysts suggest that this reduced ownership could impact investor confidence, as major shareholder participation is often seen as an indicator of commitment to the company’s growth.

Future Prospects

Despite these challenges, Taesung remains optimistic about completing the remaining stages of the rights offering as planned. The final offering price will be determined in February 2025, based on either the initial or adjusted offering price, whichever turns out to be lower. With the new facility and expanded production capabilities, Taesung aims to strengthen its global order competitiveness and solidify its position as a leading player in the PCB manufacturing and automation equipment industry.