Celltrion shares rise after bonus issue announcement   

Celltrion Inc., South Korea’s largest biosimilar developer, will issue bonus shares to bolster its stock performance, which has been in the doldrums following massive short sales triggered by growing concerns over potential US tariffs on imported medications.

On Monday, the company announced a 0.04-for-one bonus issue in a regulatory filing, entitling every shareholder to 0.04 new shares for each existing share. For example, a shareholder with 1,000 shares will receive 40 bonus shares.

The total new issuance amounts to 8,477,626 shares, and shareholders of record as of June 10 will be eligible to receive new shares, which are scheduled to be listed on July 25.

Following the announcement, Celltrion shares climbed 1.7% to end at 155,600 won ($113.23) on Tuesday, outperforming the benchmark Kospi, which fell 0.3%.

The company said that the bonus shares will effectively provide an approximate 4% stock dividend and are part of its broader efforts to enhance shareholder value.

Bonus issues do not dilute shareholder equity because they maintain the proportional ownership of each investor. They are often used to boost appeal to retail investors and can serve as an alternative to cash dividends.

Celltrion also noted that the dilution effect from the bonus issue will be limited, citing its previous treasury stock buyback size.

TO BOLSTER STOCK VALUATION

The bonus issue follows a roughly 20% decline in Celltrion shares year to date, driven by concerns over US trade policy and increased short-selling activity.

The selloff came despite its solid performance worldwide.

Celltrion has posted annual revenue growth exceeding 30%, powered by brisk sales of its blockbuster biosimilars worldwide.

If the stock's valuation continues to be depressed even after the bonus issue, the Korean biosimilar giant said it will consider additional share buybacks or share purchases by executives.  

In March, Celltrion unveiled a plan to increase its stock valuation and vowed to take active measures to enhance shareholder returns through share buybacks and cancellations, as well as executive stock purchases.

Looking ahead, Celltrion plans to launch four new biosimilar products this year, projecting more than 40% revenue growth from last year’s 3.56 trillion won ($2.6 billion).

Write to Dae-Kyu Ahn at powerzanic@hankyung.com

Sookyung Seo edited this article.