What Happened?
On September 24, 2025, Korea Advanced Materials decided to sell land and buildings located in Gwangju to HLBPep for 3.2 billion KRW. The company stated this sale aims to improve its financial structure and secure liquidity.
Why the Asset Sale?
Korea Advanced Materials has been facing a severe financial crisis in the first half of 2025, marked by continuous operating losses, significant net losses, and a low CCC+ credit rating. The asset sale is likely a strategy to secure emergency funds, reduce debt, and navigate this challenging financial situation.
What’s the Impact?
- Positive Impact: Expected short-term improvement in financial health and liquidity, potential decrease in debt ratio.
- Potential Negative Impact: Possible production disruptions if the sold assets are crucial for operations; 3.2 billion KRW might be insufficient to address underlying financial issues; potential for increased short-term stock volatility.
What Should Investors Do?
While a short-term stock rebound is possible, sustained growth is unlikely without addressing the company’s fundamental problems. Long-term investors should closely monitor operating profit, management of derivative losses, and the securing of new growth engines. Given the highly speculative CCC+ rating, caution is advised.