1. What Happened?
Daehan Optoelectronics announced the exercise of 2,619,639 warrants on July 24, 2025. The exercise price is KRW 947, and the converted shares are scheduled to be listed on August 1st and 11th.
2. Why Does it Matter?
The exercise of warrants can lead to an increase in the number of outstanding shares, resulting in a dilution of earnings per share (EPS). Additionally, investors may perceive this as a signal of uncertainty regarding the company’s financial status, potentially leading to a decline in the stock price. However, in the case of Daehan Optoelectronics, the dilution ratio is relatively low at 2.34%, and the current stock price (KRW 970) is higher than the exercise price (KRW 947), which are positive factors.
3. What’s the Likely Outcome?
While increased stock price volatility is expected in the short term, positive factors such as the KRW 57 billion order backlog and the decrease in debt-to-equity ratio may limit the extent of any price decline. The long-term stock price trend will depend on whether earnings improve after the third quarter of 2025, particularly the recovery of the US subsidiary’s performance. External factors, such as exchange rates, interest rates, raw material prices, and the global economic slowdown, can also affect Daehan Optoelectronics’ performance.
4. What Should Investors Do?
Short-term investments should be approached cautiously, closely monitoring market conditions. For long-term investment considerations, it is advisable to review the upcoming Q3 earnings report to confirm whether fundamentals are improving before making investment decisions. Particular attention should be paid to the earnings improvement of the US subsidiary and changes in domestic and international economic conditions.