Geumyang doubled in a week… The mayor said, ‘Is this right?’

 There is a debate among investors over Geumyang (001570), whose stock price doubled in a week. As it is one of the secondary battery theme stocks, there is controversy over whether the company is worth enough to exceed 6 trillion won in market capitalization even if it has long-term growth potential in mind. Some are suggesting that caution is needed as there is a possibility that short selling may be a reaction to the surge in the secondary battery theme.

According to Market Point on the 12th, Keumyang closed at 94,300 won, down 10.95% (11,600 won) from the previous trading day. It rose 21.86% the previous day and fell sharply one day after breaking through 100,000 won. Jeju Bank (006220) and Geumyang were the only stocks that dropped more than 10 percent from the stock market on this day.

It showed a double-digit drop rate that day, but the recent momentum of Geumyang is scary. It rose for 8 consecutive trading days from the 30th of last month to the previous day, recording a cumulative increase of 102.49%. The share price, which was in the early 50,000안전놀이터 won range until June, reached the 100,000 won level, and the market capitalization also doubled. As the stock price soared in the short term, the Korea Exchange announced the designation of an investment warning stock for Geumyang.

As the stock price of Geumyang soared, market concerns are also growing. As of the closing price, Geumyang’s market capitalization was 5.5741 trillion won, and it is pointed out that the value of the company recorded 213.136 billion won in sales and 13.28 billion won in operating profit last year on a consolidated basis. Currently, Geumyang’s market cap is higher than Korea Aerospace (047810), a defense company, and LG Display (034220), a display company.

There is also a question mark about the business area that Geumyang is operating. Geumyang is where Park Soon-hyeok, also known as ‘the battery man’, worked as an executive. It is classified as a secondary battery theme stock, but its main business is foaming agent production, which accounts for about 70% of sales. In addition, it is promoting lithium hydroxide processing, a key material for lithium batteries for electric vehicles, zirconium additive business to improve secondary battery performance, cylindrical secondary battery business, and hydrogen fuel cell business.

Kumyang’s stock price began to rise in earnest as it began exploring and developing resources such as lithium in Congo and Mongolia. In addition, 32 billion won was invested in new facilities for the development and production of 4680 cylindrical batteries, but it has not yet been reflected in performance. According to Geumyang , it signed a memorandum of understanding ( MOU ) with a local company to acquire shares through a business trip by last May . In the stock market, there is a short squeeze

from short-selling investors about the recent surge in stock prices of Geumyang. ) is considered to be effective. For five trading days from the 5th to the 11th, foreigners net bought 1.3146 trillion won worth of Geumyang, which is highly likely to be a buying effort to prevent losses in the process of short selling. Short squeeze refers to a trading method in which a short-selling investor, who borrowed stocks and sold stocks in anticipation of a stock price decline, buys the stock to prevent a larger loss when the stock price rises unexpectedly.

An official from a stock market said, “It is difficult to explain the rise in the stock price of Geumyang only with the growth potential of the secondary battery business.”

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