Daily Brief South Korea: Doosan Enerbility, SK Hynix, Elice Group, KOSDAQ 150 Index, FnGuide Inc, KT&G Corporation and more

• In this insight, I provide an investment thesis on Doosan Enerbility (034020 KS) which is a Korean nuclear powerhouse. 
• In addition, I highlight the likely pre-IPO investment in Westinghouse Electric (US) which is likely to occur in 4Q 2026/1Q 2027. 
• Despite the long-term higher demand for nuclear and SMRs made by Doosan Enerbility, I remain wary of the company’s high valuation multiples and worsening balance sheet.

• The dispute between SK Hynix (000660 KS) management and the labor union has been resolved; thus, production halt risks have been avoided at a critical time.
• Paying 50% of the bonus pool in treasury shares allows SK Hynix to retain billions in cash compared to paying 100% in cash. 
• The investment thesis remains intact with major hyperscalers locked into multi-year contracts with Sk Hynix while PER remains at 6x. 

• My base case valuation of Elice Group is target price of 62,353 won per share. This is 11.4% lower than the low end of the IPO price range. 
• Given the lack of upside, I have a Negative View of this IPO. The bankers used eight overseas companies as comps for Elice Group. I disagree. 
• My base case valuation of Elice Group is based on a P/E of 34.7x my estimated net profit of 20.1 billion in 2026. 

• Benchmark Anchor for South Korean Growth Capital: The KOSDAQ 150 Index serves as the premier liquid equity benchmark representing the top 150 technology, biotechnology, and high-growth industrial companies listed on the KOSDAQ market of the Korea Exchange (KRX), capturing over 70% of total market capitalization while filtering out illiquid small-cap tail risk.
• High-Beta Thematic Concentration: The index offers concentrated fundamental exposure to structural secular trends—notably advanced biopharmaceuticals, artificial intelligence semiconductor equipment, high-purity battery materials, and robotics—generating elevated upside participation during liquidity expansions and tech capex cycles.
• Institutional Utility and Structural Churn: While serving as the definitive underlying benchmark for KRX-listed index futures, options, and exchange-traded funds (ETFs), the index faces recurring structural graduation risk as mature mega-cap constituents periodically migrate to the KOSPI main board, maintaining a high-volatility, mid-to-large cap growth profile.

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• Dominant Market Position in Financial Intelligence & Thematic Indices: FnGuide Inc. (064850 KS) is South Korea’s preeminent independent financial data, investment analytics, and index benchmark provider, functioning as an essential market infrastructure player levered directly to the secular expansion of the Korean exchange-traded fund (ETF) market (AUM exceeding KRW 512tn).
• Inflection in Operating Leverage & Profitability: The business model is undergoing a structural shift toward high-margin index licensing fees (~47.3% of top-line revenue in 1Q 2026), driving record financial performance in 2Q 2026 with quarterly revenue reaching KRW 14.92bn (+85.5% YoY) and EBITDA margins expanding to 54.87%.
• Robust Balance Sheet with Attractive Cash Generation: FnGuide maintains a high-quality financial profile characterized by a 3-year Free Cash Flow CAGR of 18.01%, zero net debt (KRW 14.07bn net cash), and high returns on invested capital, though geographic concentration in Korea and recent corporate governance transitions warrant institutional monitoring.

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• Activists are losing legal leverage, but the defensive cost is rising: The Daejeon District Court’s August 12, 2026 ruling, which rejected Flashlight Capital Partners’ (FCP) derivative lawsuit against former directors, has temporarily shielded KT&G’s board. However, defending against the October 2024 hostile bid of 1.9 trillion won for Korea Ginseng Corp (KGC) has forced the company to commit to an unprecedented 360 billion won share buyback starting today (September 23, 2026), and to completely retire 1.8 trillion won in treasury shares.
• Regulatory arbitrage is closing rapidly: South Korea’s April 24, 2026 amendment to the Tobacco Business Act closed the synthetic nicotine excise tax loophole, instantly leveling the playing field for the “Lil” Heat-Not-Burn (HNB) portfolio against low-cost independent vape competitors. Simultaneously, the Ministry of Health and Welfare’s Sixth National Health Promotion Plan (2026–2030) outlines a transition toward a domestic retail price of 10,000 won per pack—representing a potential margin reset.
• The Kazakhstan “Eurasian Supply Hub” is a geopolitical hedge: The newly completed Almaty facility (April 2025), with its 4.5 billion stick capacity, successfully mitigates Russia-Ukraine war-related logistics disruptions and provides tariff-free access inside the Eurasian Economic Union (EAEU). However, regional EAEU excise harmonization agreements (targeting 35 EUR per 1,000 sticks) are placing downward margin pressure on combustible volumes, speeding up the transition to the higher-margin Lil platform.