1. What Happened? Overheated Stock Designation

On September 22, 2025, Korea Advanced Materials was designated as an overheated stock, triggering a three-day single-price trading period. This suggests the recent surge in stock price is likely driven by speculative demand rather than fundamental improvements.

2. Why? Deteriorating Fundamentals and Uncertain Future

  • Financial Distress: The 2025 semi-annual report reveals declining sales, continuing operating losses, and a severe capital impairment. The company’s credit rating has also been downgraded to CCC+, indicating high financial risk.
  • Mixed Performance in Optical Communications: While AWG and 5G MUX (TFF) segments show growth potential, the OSP and portable optical measurement device sectors are struggling, impacting overall performance.
  • Uncertainty Surrounding New Businesses: Despite announcing entry into secondary batteries and unmanned aerial vehicles, concrete plans and investments remain absent. The current financial situation raises doubts about the feasibility of pursuing these ventures.

3. What’s Next? Short-Term Volatility, Long-Term Uncertainty

  • Short-term Impact: Single-price trading is expected to increase trading volume and price volatility. Investor sentiment may weaken, potentially leading to a price correction.
  • Long-term Impact: Without fundamental improvements, stock price appreciation will be limited, and financial risks will persist.

4. What Should Investors Do? Proceed with Caution

Investing in Korea Advanced Materials requires extreme caution. Avoid being swayed by short-term price fluctuations and closely monitor the company’s fundamental improvements. A wait-and-see approach is recommended until tangible progress is made in restructuring finances and demonstrating viable new business ventures.