1. What Happened?

Pungwon Precision announced the exercise of convertible bonds for 1,622,060 shares on August 20, 2025. The conversion price is 8,631 KRW, and the new shares are expected to be listed on September 3rd. This represents approximately 7.71% of existing shares.

2. Why Does It Matter?

The exercise of convertible bonds leads to stock dilution, which can decrease earnings per share (EPS) and put downward pressure on the stock price. Pungwon Precision’s current poor performance and deteriorating financial health exacerbate the negative impact of this event. The potential for profit-taking by investors after the new shares are listed should also be considered.

3. What Should Investors Do?

Investors should proceed with extreme caution. The likelihood of a short-term price drop is high, so new investments should be approached carefully. Existing investors should closely monitor future earnings announcements and the performance of the FMM business, as well as prepare for the possibility of further conversions. While the potential for growth in the FMM market remains, caution is advised until tangible improvements in performance and financial health are observed.

4. Investor Action Plan

  • Short-term Investors: Wait and see. Rushing into an investment could lead to losses.
  • Mid-to-Long-term Investors: Make investment decisions after confirming concrete results from the FMM business and improvements in the financial structure.
  • All Investors: Continuously monitor future earnings announcements, FMM business progress, and the possibility of additional convertible bond exercises.