South Korea

• The MTD Reply may help Hynix secure dismissal, but its arguments on quarterly pricing upside and HBM’s outsized margins could reinforce peak out concerns and increase antitrust risk.
• Chey appears to be pushing back against HBM peak out concerns by accelerating capex and reinforcing management’s confidence in sustained HBM and AI demand.
• Hynix may accelerate ADR expansion ahead of the Solidigm IPO, using deeper US market ties as a shield against regulatory risk.

• Samsung Electronics (005930 KS) gained 3.3% in September and its 2x Leveraged Index rose 4.6%, while combined long-ETF AUM remained broadly steady, declining 0.9%.
• All seven long-leveraged ETFs recorded unit redemptions, with net outflows reaching KRW 200bn in September and continuing in early October.
• In contrast, the inverse ETF’s unit count rose 90% and AUM increased 62%, despite the product losing 14.7% in September.

• Sungho Electronics is trading at 49% and 39% discount to Robotechnik in terms of their 2027 and 2028 consensus earnings estimates, respectively.
• Sungho Electronics is trading at 94% and 93% discount to Robotechnik based on P/B valuation multiples in 2027 and 2028, respectively. 
• Consensus estimates Sungho Electronics’ operating profit to increase from 7.6 billion won in 2025 to 41 billion won in 2026 and 108.1 billion won in 2027. 

• Global Volume Leadership and Scaled Commercial Footprint: Osstem Implant maintains the world’s #1 market share position in dental implants by sales volume, driven by its proprietary AIC dentist training network, comprehensive direct-sales subsidiary infrastructure, and competitive value-segment pricing.
• Margin Inflection Following VBP Disruption: While top-line revenue expanded steadily from KRW 1.21T in FY23 to KRW 1.33T in FY25, operating and net margins absorbed significant headwinds from China’s centralized Volume-Based Procurement (VBP) pricing before demonstrating a decisive margin inflection in 1H26 (EBITDA margin rebounding to 21.4% in 2Q26).
• Private Equity Governance and Operational Modernization: Following the privatization led by MBK Partners and Unison Capital, corporate governance and financial controls have been substantially upgraded, positioning the firm for enhanced capital discipline, overseas direct-sales expansion (Hiossen), and digital dentistry bundling.

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• There are three key investment highlights of Dongkook Pharmaceutical. First, the company has successfully expanded its cosmetics/health care business. Healthcare/cosmetics accounted for nearly 40% of total sales in 1H 2026. 
• Second, the company has highly consistent growth in sales and profits backed by solid sales of its core pharmaceutical/cosmetics brands including Madecassol, Insadol, Centellian24, and Madeca Cream.
• Third, it has cheap valuations. It is trading at P/E of 10.5x and P/B of 1.2x based on 2027 consensus earnings estimates.

• Jusung and Hanmi Semiconductor remain mcap Top 4, but weak momentum Z scores keep both low probability inclusion candidates for Monday’s 0167A0 rebalance.
• Samsung and Hynix stay Top 2; Samsung E-M, Square, Isu and Daeduck hold Top 4. TES stays, with Simmtech, Fadu and Hana Micron likely replacing PSK, VM and Wonik IPS.
• Simmtech is the strongest inclusion candidate, with ~KRW 200bn passive inflow, over 4% of float and ~1x recent DTV, making it a key name to watch Monday.

• In this insight, I revisit the growth in the quarterly operating profit/operating margins of Samsung Electronics in the past 16 years and compare them against their actual share price performances.
• I remain moderately Bullish on Samsung Electronics since the first two pros (super cheap valuations and huge shareholder returns) outweighs the cons, in my view over the next 3-6 months.
• Certainly, we are not in the 2nd/3rd round of the super AI semiconductor cycle. We are probably closer to the 7th/8th inning. Nonetheless, time seems to be running out. 

• 3Q26 prelim OP ₩107.4T (+20.0% QoQ): 0.7% below our ₩108.2T, 1–2% above a street bar that fell 7% since August. Revenue ₩195T is 2.6% light on the won.
• The 2.4% fall was plumbing: ETF rebalancing, options expiry and the end of the ₩15T buyback, which absorbed ~76% of September’s selling. Samsung fell less than the KOSPI.
• BULLISH, TP ₩400,000 held (+53%). At 3.9x consensus FY27E, the market doubts 2028, not 2027. January’s ₩55–75T could be five times the buyback that just ended.

• My base case valuation of DTS is a target price of 29,360 won per share, which is 59% higher than the high end of the IPO price range (18,500 won). 
• For my base case valuation, I used a P/E multiple of 12.3x based on my estimated net profit of 35.6 billion won in 2027.
• DTS designs and manufactures air-cooled heat exchangers used in power generation, LNG, and petrochemical plants. DTS is expanding into AI data centers and sustainable industrial waste-heat recovery systems.

• Consensus estimates Samsung Electronics to generate sales of 200.6 trillion won (up 133.1% YoY) and operating profit of 106.6 trillion won (up 776.3% YoY) in 3Q 2026.
• Operating margin is expected to rise to 53.1% in 3Q 2026, up from 14.1% in 3Q 2025 and 52.2% in 2Q 2026. 
• It is estimated that about 60 to 80 trillion won is left for shareholder returns by Samsung Electronics in 2026.

• SK hynix (000660 KS) gained 6.1% in September and its 2x Leveraged Index rose 9.6%, yet combined long-ETF AUM declined 2.7%.
• All seven long-leveraged ETFs recorded reductions in units outstanding, while September net outflows reached KRW 514bn and daily flow activity remained subdued.
• In contrast, the inverse ETF’s units outstanding more than doubled and its market capitalisation increased 68%, despite the product losing 17.0% during September.

• On 7 October, it was reported that SAMG Entertainment will supply its Catch! Teenieping products to about 2,000 Target stores in the United States.
• In my view, this deal with Target could add additional 11 billion won+ sales in 2026 and 28 billion won+ in 2027 for SAMG Entertainment.
• So this deal with Target could result in additional 6.7% and 15.9% sales for SAMG Entertainment, respectively in 2026 and 2027. 

• Most analysts expect Samsung Electronics (005930 KS) to post its fourth consecutive quarter of record operating profit, driven by ongoing AI infrastructure demand and tight memory suppliesA
• The LSEG SmartEstimate points to a massive year-over-year jump in earnings—up from 12.17 trillion won a year earlier—with some brokerage forecasts hovering around 105 trillion won in total operating profit. 
• Near-Term flows around the October 8 print should be volatile owing to the convergence of preliminary guidance, semiconductor ETF rebalancing, options expiry, and the conclusion of Samsung’s share buyback program.

• Founded in 2000 and KOSDAQ-listed in 2021, DYC makes precision-machined auto powertrain(drivetrain) parts, winning new-model programmes from global OEMs(Mercedes·BMW·Audi·Porsche·Stellantis·GM, etc.) in Tier-1 bids and mass- supplying them with induction heat treatment, friction welding and precision machining.
• Subsidiary DYC Dynamics makes guided-missile parts such as fuzes and attitude control(axial thruster) components
• Its managers have about 30 years of R&D experience at defence firms such as Hanwha, covering everything from reverse engineering to mass production.

• Severe consolidated leverage and liquidity pressures on E-Mart have been exacerbated by parent-level strategic pivots, notably the $1 billion (1.36 trillion won) investment by wholly-owned subsidiary Shinsegae Property in the Paramount Skydance takeover of Warner Bros. Discovery (WBD) on October 6, 2026, and the 500 billion won emergency bailout of distressed subsidiary Newsea Construction (formerly Shinsegae E&C) in May 2026.
• The structural retreat of the integrated online strategy is codified by the August 2026 buyout of SSG.com’s financial investors and subsequent corporate split. E-Mart paid 827.5 billion won to buy out Olympus First’s stake, only to announce a day later a spin-off of its fashion, beauty, and lifestyle divisions. This marks a formal unwind of the seven-year-old unified online platform strategy to instead focus on grocery, while facilitating a clean family division of business lines between Chairman Chung Yong-jin and his sister Chung Yoo-kyung.
• A new structural working capital headwind has emerged from the September 17, 2026 National Assembly legislative reform, which slashes supplier payment deadlines from 60 days to 35 days for direct purchases. This regulatory change imposes immediate cash flow strains on E-Mart’s core offline business, compounding the ongoing domestic hypermarket traffic decline and high minimum wage costs (surpassing 10,000 won per hour) that render late-night/dawn delivery expansions economically unviable relative to Coupang’s 75% dawn-delivery market share.

• Sustaining 50%+ Operating Margins is Structurally Improbable: KMF’s impressive 55.8% operating margin in 2025 and 51.9% in 1H 2026 are heavily anchored in its legacy business—namely low-tech, high-volume fermented enzyme materials, which accounted for 78.3% of 2025 revenue. As the company pivots toward high-value functional materials like short-chain fatty acids (SCFAs) and GLP-1 Pair, the yield rates will degrade from over 85% to under 25%, drastically increasing purification costs and compressing the margin profile.
• Encapsulation Moat is Niche and B2B-Deficient: While KMF’s Target Delivery System (TDS) provides genuine IP defensibility for specialized applications like water-soluble calcium (AquaShell S) and coated apple cider vinegar, it lacks significant switching costs in the broader B2B food-ingredient sector. Pure-play competitors like Bio FD&C have more robust corporate account networks and superior synthetic biology capabilities, leaving KMF’s expansion into next-generation biomaterials highly vulnerable to customer churn.
• CapEx Overcapacity Will Dilute Near-Term ROE: The upcoming KOSDAQ IPO (targeting a 128 billion to 152 billion won valuation in November 2026) aims to raise 30 billion to 35.6 billion won primarily to construct Plant 2. This massive brick-and-mortar investment will expand manufacturing space but will inevitably drag down KMF’s historical asset-light capital efficiency—which yielded a north-of-40% ROE in 1H 2026—due to front-loaded depreciation and uncontracted capacity.

• Korea Airport Service (005430 KS) holds an entrenched, market-leading position across South Korea’s aviation ground handling, aircraft fueling, line maintenance, and air cargo support sectors, operating as a vital operational subsidiary of Hanjin Group (Korean Air).
• The operational integration of the Korean Air and Asiana Airlines merger serves as a multi-year growth catalyst, consolidating ramp handling volumes and driving top-line momentum alongside a sharp resurgence in international tourist traffic, particularly from mainland China.
• Valuation remains compelling at approximately 5.4x P/E and 2.5x EV/EBITDA, backed by elite Smartkarma Smartscore metrics in Growth (5/5), Resilience (5/5), and Momentum (5/5), counterbalanced by labor wage pressures and a conservative shareholder dividend yield.

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• On 6 October, the Shinsegae Group announced that its property development affiliate, Shinsegae Property, will invest $1 billion (approximately 1.4 trillion won) into the Warners Bros Discovery (WBD) acquisition.
• E Mart Inc (139480 KS) currently owns an 100% stake in Shinsegae Property. E Mart continues to face difficulties on meaningfully improving its retail and e-commerce local businesses in Korea. 
• In the near-term (1-2 years), this investment is more likely to have a negative impact on E mart mainly due to additional burdens on its balance sheet. 

• A total of 2,367 institutions participated in the Elice Group IPO survey. The total demand ratio was 388.8 to 1. IPO price was finalized at 90,500 won.
• My base case valuation of Elice Group is a target price of 62,353 won per share which is 31% lower than the IPO price of 90,500 won.
• Given the lack of upside, I have a Negative View of this IPO. Bankers used eight overseas companies as comps for Elice Group. I used four Korean companies as comps.

• KMF is getting ready to complete its IPO on the KOSDAQ market in November. The indicative IPO price range is 15,000 to 17,800 won per share.
• Since its establishment in 2002, KMF has developed and produced functional food and bio-materials based on fermentation and enzyme technologies.
• Total revenue and net income increased by 259% and 1,018%, respectively from 2023 to 2025. KMF’s operating margins are extremely high at 55.8% in 2025 and 51.9% in 1H 2026. 

• These are all indicative numbers. Both the per share price and the total deal value can be adjusted on the actual execution date
• The November 2 to December 1 window reflects disclosure rules, not a 30 day sell down. Given the block plus PRS structure, base case is November 2.
• November 2 is the settlement date, implying October 29 execution via pre market block trade, with October 28 close as the pricing reference.

• In this insight, I provide a list of top 10 performing stocks in KOSDAQ YTD (those with market caps of at least 100 billion won). 
• These 10 stocks are up on average 521% YTD. All of these 10 companies could be considered turnarounds with their sales and profits improving much more in 2026 versus 2025.
• This is a clear example that shows that small cap turnarounds listed in KOSDAQ that are in the value-chain of Samsung Electronics and SK Hynix could pay off handsomely. 

• LS Electric (010120 KS) has morphed from a domestic electric component player into a global powerhouse thanks to the demand-supply imbalances mainly in the US. 
• Share price and valuation have gone up, but the earnings growth rate has also increased that made the PEG ratio hover between 1 and 1.2x, relatively undemanding for growth sector. 
• It is no longer a utility and power play but now it is part of the AI and Data center ecosystem.

• Chairman Chey’s landmark 2.3% share sale in SK Inc. (disclosed on October 2, 2026 for 944 billion won) is a watershed moment for South Korean corporate governance. It proves that personal liquidity pressures from his divorce settlement are overriding the historical “no-sale” taboo of controlling stakes, yet the innovative use of a Price Return Swap (PRS) for 400 billion won of the transaction preserves his economic interest and minimizes immediate market dump.
• The 2.3 trillion won divestment of SK Inc.’s 70.6% stake in SK Siltron to Doosan in July 2026 signals the final, execution-heavy phase of SK’s three-year group-wide rebalancing. This cash injection directly supports the holding company’s Value-up commitment, enabling the planned cancellation of its 20% treasury stock and funding the floor dividend of 5,000 won per share.
• SK Inc. remains plagued by a “double discount” structural trap, trading at an approximate 50% discount to NAV. Because 98% of affiliate SK Square’s value is tied to its 20% stake in SK Hynix, SK Inc. sits two layers removed from the group’s primary semiconductor engine, creating massive cash-flow friction and leakage as dividends flow through multiple corporate entities before reaching the top.

• SK Group Chairman Chey Tae-won plans to sell 1,653,924 shares (2.3% of outstanding shares) of SK Inc (034730 KS) to pay for divorce payment.
• After this stake sales, Chairman Chey’s stake in SK Inc will decline from 17.8% to 15.5%.
• This is a bit surprising since the overall market expectation has been that Chairman Chey would not likely to sell any stake in SK Inc to pay for divorce payment.

• AL (Artificial Life) Robot is getting ready for an IPO on KOSDAQ in November. AL Robot is offering a total of 2.4 million shares. 
• The IPO price range is 15,700 to 17,600 won, placing the total offering size between 37.7 billion and 42.2 billion won. 
• AL Robot specializes in robot components. The company develops and supplies various components including sensors that detect a robot’s force and contact data to control units that precisely manage movement.

• The Core Valuation Risk: The investment thesis for AL Robot’s IPO relies on a dramatic pivot from its historical low-margin integrated control units (which accounted for 94.2% of 2025 revenue of 14.98 billion KRW) to its high-margin joint torque sensors (which made up just 5.8% of 2025 revenue).
• The Competitive Moat & Switching Costs: While AL Robot’s TSR-Series joint torque sensor boasts a rare TÜV SÜD SIL 2 / PL d safety certification—positioning it alongside Nidec as one of only two globally certified players—displacing incumbents is incredibly difficult. Tier-1 robot manufacturers face a minimum 18 to 24-month qualification cycle and massive software re-integration costs, keeping the near-term win-loss ratio in international markets low.
• FCF Breakeven & Capacity Realities: Reaching free cash flow (FCF) breakeven by late 2027 and hitting the 2028 export target of 45.6% (representing 25.0 billion KRW out of 54.8 billion KRW total revenue) is entirely dependent on automating the sensor calibration process. Currently, manual calibration creates a massive operational bottleneck; the 42.2 billion KRW IPO proceeds must be strictly directed toward custom multi-axis automated calibration chambers to scale gross margins toward 55%.

• In this insight, I discuss numerous gap trade opportunities involving Korean preferred and common shares in 4Q 2026.
• Preferred companies’ share price discount (relative to the common shares) on the 27 pairs below was 46.9% as of 1 October 2026, down slightly from 47.2% on 3 July 2026. 
• There has been an increasing number of pairs (such as Samsung Electronics pref) where the preferred shares are starting to outperform their common share counterparts in the past three months. 

• In this insight, I discuss the alpha generation through companies that announced share buybacks in the Korean stock market in August and September 2026.
• This insights provides a list of 43 companies in the Korean stock market that have announced share buyback programs in August and September 2026.
• There were seven companies with more than 300 billion won in market cap that announced share buybacks in the past two months with at least 1% of outstanding shares.

• We forecast 3Q26E OP ₩108.2T, above the consensus range ₩104–107T. Micron’s +30% NAND pricing skews risk upward to ₩117T; the won costs ₩6T. Ignore an FX revenue miss.
• January’s ₩55–75T cash allocation is the real catalyst, not the 3Q26 prelim. Our FCF math points to ₩110T; share cancellation beats dividends for EPS. 
• Our forecasts is FY26E OP ₩373T, EPS ₩44,961; FY27E EPS ₩55,055. TP ₩400,000 held at 7.3x FY27E, the bottom of Samsung’s 10-year band. Maintain BULLISH.

• Founded 2014, KOSDAQ-listed 2025; full-stack mobile ad platform                         
• Korea’s only listed GCPP: Google’s top-tier official partner
• Revenue from new RTB-based platforms up 214% YoY in 1Q2

• Treasury Share Cancellation Mandated by Regulatory Shift: The massive 12.0% treasury share cancellation (valued at KRW 282.8 billion) and subsequent KRW 140 billion buyback-and-cancel program are structurally driven by South Korea’s Commercial Act amendments and the corporate Value-up program, marking a permanent end to Cheil’s decade-long cash-hoarding strategy.
• Captive Spend Squeeze and KFTC Oversight: While Cheil maintains its high-barrier captive moat with Samsung Group (accounting for approximately 70% of gross profit), the Korea Fair Trade Commission (KFTC)’s rigorous transfer-pricing audits and bidding rules prevent arbitrary pricing, forcing Cheil to compete on merit while managing a severe near-term marketing spend cut from Samsung’s Mobile Experience (MX) division.
• GenAI and Structural Margin Pressures: Generative AI has initiated deflationary pressure on Cheil’s traditional cost-plus creative production billing. The company is actively shifting to digital retail and direct-to-consumer (D2C) channels to maintain its target 18.0% to 20.0% operating profit-to-gross profit (OP/GP) ratio, balancing structural cost inflation with a strict 60.0% dividend payout policy.

• POSCO’s pre-market block sale of its entire 2.7% stake (20.28 million shares) at 33,360 won per share on October 1, 2026, successfully unwinds a decade-long strategic cross-shareholding. While it removes a structural overhang, it has triggered immediate downward pressure on the stock, falling over 4% today.
• Woori’s diversification strategy is materially shifting its earnings profile, with non-banking net income contribution climbing from 7% in Q2 2025 to 22% in Q2 2026. This growth is anchored by the dual acquisition of Tongyang Life and ABL Life for a combined 1.54 trillion won, which is slated to culminate in a merged 55 trillion won life insurer in the second half of 2027.
• Tight regulatory constraints are forcing major operational adjustments. Despite the Financial Services Commission (FSC) expanding the annual household loan growth target from 1.5% to 3% in August 2026, Woori Bank has had to implement aggressive self-imposed caps—such as slashing monthly mortgage lending per branch to 1 billion won—to maintain compliance while stabilizing its CET1 ratio at 13.71% as of Q2 2026.