NK Executes 10-to-1 Reverse Stock Split: "Share Dilution Resolved"

NK announced on April 20 that, following the cancellation of 4.7 million treasury shares completed on April 16, it will carry out a 10-to-1 reverse stock split.

The effective date of the reverse split is April 30, and trading will be suspended from April 28 to May 21. The new shares post-split are scheduled to be listed on May 22. Through this split, the current 78,880,322 issued shares will be consolidated into 7,888,032 shares at a 10-to-1 ratio, and the par value per share will change from KRW 500 to KRW 5,000. NK emphasized that this measure is a pure adjustment of the number of shares, not a capital reduction accompanied by a decrease in capital stock.

The key purpose of this reverse split is to "maintain an appropriate number of issued shares." If the number of issued shares is excessively high, the per-share asset and earnings values are diluted, resulting in structural undervaluation of the stock price. By adjusting the number of issued shares to an appropriate level through the reverse split, key investment indicators such as earnings per share (EPS) and book value per share (BPS) will increase by a factor of 10, and the company will be better positioned to meet portfolio inclusion criteria for institutional and foreign investors.

In particular, attention is being drawn to the fact that the share dilution effect, which has been suppressing the stock price, will be resolved. An excessive number of issued shares weakens the representative value of each share, distorting the market's price discovery function. Through this reverse split, the scarcity of circulating shares will increase, naturally strengthening the stock's downside support and helping the company shed its image as a low-priced stock, thereby attracting a broader base of investors. Since only the number of shares is reduced without any change to the capital, the value of existing shareholders' stakes will be fully preserved.

An NK official stated, "Alongside the structural enhancement of shareholder value through the reverse split, the recovery of fixed fire extinguishing system orders and the full-scale launch of the defense affiliate's submarine component supply business are expected to drive visible improvement in this year's performance," adding, "These fundamental improvements are expected to serve as a catalyst for a significant change in the stock price, which has long been trapped in a narrow range."

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