Jungang Advanced Materials, Smooth Lithium Salt Supply... "Q3 Earnings Improvement Expectations '↑'"

Jungang Advanced Materials is expected to successfully exit the status of a stock under investment caution through rapid improvement in financial indicators. On the 23rd, Jungang Advanced Materials announced that the lithium salt supply contract worth approximately 16.5 billion KRW signed with Enchem is progressing smoothly.

Jungang Advanced Materials was designated as a stock under investment caution after recording a capital impairment of 25 billion KRW in the first half of this year. The company recently resolved the capital impairment by reaching an agreement with existing investors to delete the refixing clause on convertible bonds (CB) ? which was the main cause of the impairment ? and extending the terms.

In August and September, Jungang Advanced Materials laid the foundation for performance improvement by signing three lithium salt supply contracts worth 16.5 billion KRW with the global electrolyte specialist Enchem. The deletion of the CB refixing clause and conversion of some CB volumes into shares reduced debt by approximately 90 billion KRW. The new order amount is reflected in the third quarter financial statements, leading to significant performance improvement, according to the company.

A Jungang Advanced Materials representative explained, “Until the first quarter of this year, the company’s capital scale was about 27 billion KRW. The reason for the large-scale loss in a short period is that, under the Korean International Financial Reporting Standards (K-IFRS), mezzanine securities with volatility in future share numbers, such as refixing, must be recognized as liabilities.”

He added, “We recently deleted the refixing clause through amicable agreements with investors, and some CBs have been converted or extended. Therefore, concerns related to fundamentals are expected to be resolved in the third quarter financial statements. Executives have also actively purchased treasury shares to boost confidence in the company’s performance improvement and enhance shareholder value.”

Meanwhile, the lithium salt production business, which Jungang Advanced Materials is conducting through the joint venture (JV) ‘IDIEL’ established with Enchem, is also progressing smoothly. Enchem is accelerating the project by recruiting lithium salt specialists to work in the Saemangeum area through job postings. IDIEL aims to complete the first phase by the end of next year and plans to build a lithium salt manufacturing facility with a capacity of up to 50,000 tons by the end of 2026.

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