[Alpha Biz= Paul Lee] LS Securities has downgraded its investment rating on KCC from "Buy" to "Hold," while maintaining its target price at KRW 342,000.



In a report published on July 4, analyst Kyunghee Jung of LS Securities noted that while the issuance of exchangeable bonds (EB) could be seen as a positive move for enhancing corporate value, the decision to opt for EB issuance over asset sales for debt reduction was "disappointing."



KCC recently announced it would issue USD 625 million (approximately KRW 852.1 billion) worth of exchangeable bonds backed by around 2.1 million common shares of HD Korea Shipbuilding & Offshore Engineering. The bonds carry a coupon rate of 1.75%, and proceeds will be used to repay acquisition-related debt of KCC's U.S. subsidiary, MPM Inc. The company expects the issuance to result in annual interest savings of approximately KRW 38.1 billion.



Commenting on KCC's newly unveiled “2025 Value-Up Plan,” Jung expressed concerns that despite the high burden of interest expenses—amounting to 74% of the company’s operating profit—there was a lack of clear strategy regarding its financial assets.



She also warned that pending changes to the Korean Commercial Act, which may expand board member liability to shareholders, could spark governance-related controversies.

 

 

 

[ⓒ 알파경제. 무단전재-재배포 금지]