SK Innovation’s shares fell Monday as its new $900 million rights issue plan unnerved investors.
Shares of the South Korean energy company slid as much as 8.9% to 166,300 won ($127.06) in morning trade, on course for their sharpest daily percentage decline in more than three years, according to FactSet. The benchmark Kospi was 0.2% higher.
SK Innovation said in a regulatory filing after market close Friday that it would raise KRW1.178 trillion by issuing 8.19 million new shares at KRW143,800 each for debt repayment and new investment in battery and other new businesses.
Samsung Securities analysts Cho Hyun-ryul and Kim Young-uk said in a note Monday that they expect the new rights issue to increase the number of SK Innovation shares by 9% and lower the stock price by 3.3% as a result. A stock’s value can be diluted by an increased number of shares on the market.
Still, the Samsung analysts maintained their buy rating and KRW240,000 target on the stock, forecasting limited impact from the rights issue on the company’s long-term valuation despite the near-term overhang risk.
They remained upbeat on the company reducing debt and improving profitability at its battery affiliate.