Daily Brief South Korea: LG Chem Ltd, Hyundai Motor , Posco Future M, Intops Co Ltd, Woori Technology and more

• Last week, London-based activist Palliser Capital tapped LG Chem (051910 KS) to remedy its NAV market discount. Palliser also said it now holds a little over 1% in LG Chem.
• LG Chem’s large NAV discount is well known. It has been present since ~82%-held LG Energy Solution (373220 KS) (LGES) was listed in January 2022. 
• An obvious solution is to pare down the LGES stake, and buy back shares. Yet the discount remains as the market views management as being (stubbornly) set in their ways.

• HMC buyback ~₩0.8–1.0tn (~1.5% SO). Street focus is ord/pref split, with prefs at ~25% discount. Mgmt urgency: lift equity value as K‑market rallies.
• Narrowing the pref gap seen as the cleanest lever—shareholder‑friendly signal, draws real money/offshore flows, de‑risks policy optics—so locals expect the first buyback leg skewed to prefs.
• Street sees HMC aiming mid‑teens pref discount via year‑end pref‑heavy buyback and dividend tax reform. Catalysts make narrowing trend look achievable.

• Posco Future M is uniquely positioned in the electric vehicle (EV) battery materials market as South Korea’s only producer of both cathode and anode materials, providing a comprehensive solution to battery manufacturers.
• The company is aggressively expanding its production capacity with a target of producing 1 million tons of cathode materials and 370,000 tons of anodes by 2030, supported by significant long-term supply agreements with major battery makers like Samsung SDI and LG Energy Solution.
• While demonstrating strong top-line growth, the company faces challenges from intense competition, particularly from Chinese rivals in the anode market, and is focused on vertical integration and cost reduction to maintain its competitive edge.

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• Intops is undergoing a significant strategic pivot from its declining legacy business of manufacturing smartphone components, primarily for Samsung, to the high-growth potential robotics sector.
• Financial performance has deteriorated significantly in the last three years, with sharp declines in revenue, profitability, and cash flow, reflecting the challenges in the global smartphone market and high customer concentration.
• The company’s valuation appears attractive on a price-to-book basis, but this is counterbalanced by high uncertainty surrounding the successful execution and future profitability of its new robotics venture.

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• Woori Technology is a key supplier of critical control systems to South Korea’s nuclear power industry, a sector poised for growth due to a favorable shift in government policy. The current administration has reversed a nuclear phase-out plan, now targeting nuclear power to supply at least 30% of the nation’s electricity by 2030 and aiming to export 10 nuclear plants.
• The company has diversified its operations into the defense, railway, and renewable energy sectors, reducing its sole reliance on the nuclear industry. Its defense business supplies components for military vehicles, while its railway division focuses on high-safety control systems.
• Despite strong long-term revenue growth, the company faces significant profitability challenges and negative free cash flow. Recent financial performance shows a sharp decline in net income and margins, coupled with consistently negative free cash flow over the past decade, raising concerns about its financial stability and cash generation capabilities.

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