[After CB Issuance] Mobile Apps, the Far Yet Near Autonomous Driving

Profitability Improvement Despite Sales Decline
Low Returns Compared to Market... Continued Conversion Price Adjustments
Ongoing Expectations for Autonomous Driving Market Growth

[Asia Economy Reporter Hyungsoo Park] Mobile Appliance adjusted the conversion price of the 4th series convertible bonds issued last November. Although the conversion price was lowered once in February last year, it was lowered again as Mobile Appliance's stock price continued to decline. This is interpreted as an effect of sluggish business conditions due to the impact of COVID-19 last year, which prevented performance from improving as quickly as expected.

According to the Financial Supervisory Service's electronic disclosure system on the 26th, Mobile Appliance adjusted the conversion price of the 4th series convertible bonds from the existing 5,038 KRW to 4,260 KRW. Although the conversion price was adjusted, it remains higher than the previous day's closing price of 4,070 KRW. The number of convertible shares increased from 3,969,829 shares to 4,694,835 shares.

Mobile Appliance issued convertible bonds worth 20 billion KRW last November. The funds were raised for operational capital. Major investors included Suseong Asset Management, C Square Asset Management, NH Hedge Asset Management, and GVA Asset Management. Shinhan Investment Corp. and eBest Investment & Securities also each acquired convertible bonds worth 2 billion KRW.

Both the nominal interest and maturity interest rates are zero percent (0%). It appears that the investment was made under the judgment that profits could be earned by converting to common stock. At the time of issuance, the conversion price was 5,412 KRW, and a conversion price adjustment (refixing) clause was included, allowing it to be lowered to as low as 3,789 KRW due to stock price declines.

Mobile Appliance is a company that develops video recording devices, head-up displays (HUD), advanced driver-assistance systems (ADAS), and navigation systems installed in automobiles.

It supplies radar video recording devices to global automakers such as BMW and Audi. BMW and Audi sell models equipped with radar video recording devices in countries including Germany, the United Kingdom, the United States, France, the Netherlands, Italy, Spain, Portugal, Russia, Japan, China, and Korea. HUDs are sold in the United States and Europe. ADAS has been supplied to BMW since June 2016.

Mobile Appliance recorded sales of 41.6 billion KRW, operating profit of 2.6 billion KRW, and net profit of 2.5 billion KRW last year. Sales decreased by about 7% compared to the previous year, but operating profit and net profit turned positive. Although sales declined due to the impact of COVID-19, profitability improved thanks to cost reductions. In the first quarter of this year, sales were 9.1 billion KRW and operating profit was 555.3 million KRW. Sales decreased by 0.6% compared to the same period last year, but operating profit increased by 32.5%.

Although profitability has steadily improved, Mobile Appliance's stock price has underperformed the market return since the issuance of convertible bonds. From November 20 last year for six months, Mobile Appliance's stock price fell from 5,280 KRW to 4,070 KRW, a decline of 22.9%. During the same period, the KOSDAQ index rose by 11.9%. This signals a red light for investors who acquired convertible bonds trusting Mobile Appliance's technology and planned to exit their investments.

The conversion request period for the 4th series convertible bonds is from November 24 this year to October 24, 2025. Considering that about six months remain until the period when conversion rights can be exercised and that there is still room for refixing, there is sufficient potential to generate profits.

Competition among automakers to dominate the autonomous vehicle market is becoming increasingly fierce. Global automakers are developing autonomous vehicles with the goal of commercializing autonomous driving by 2030. The global autonomous vehicle industry’s technology level is currently at Level 2-3, which corresponds to partial and conditional automation, and truly autonomous driving systems at Level 4 or higher have not yet been commercialized.

Governments around the world are also sparing no support in developing autonomous vehicle technologies essential for leading the future automotive market. Germany is working on legislation to permit driverless unmanned vehicles on public roads by 2022. Once autonomous vehicles begin operating on public roads, the related market is expected to grow rapidly.

This content was produced with the assistance of AI translation services.