Daily Brief South Korea: Samsung Electronics, Smec Co Ltd, POSCO Holdings, SK Biopharmaceuticals , LOTTE Corporation, Shinyoung Securities and more

• On 25 November, the Democratic Party of Korea confirmed that the cancellation of treasury shares will be made into law by the end of 2025.
• Companies that buyback their shares (as treasury shares) will be required to cancel them within one year of the buyback. 
• There may be a LOOPHOLE if the company fails to cancel the treasury shares on time. Fine per director is only 50 million won and this may be too low. 

• SNT Holdings (036530 KS) has lifted its stake in SMEC (099440 KS), South Korea’s second-largest machine tool manufacturer, to 13.65% from 8.19%. SNT’s chairman also holds 6.55%, or 20.2% all-in.
• Concurrent with the stake increase, SNT formally declared its equity holding in SMEC to  “management participation” from “simple investment“. 
• The move could simply be one of SNT aligning its interests with SMEC’s management. But more likely, it’s a precursor to a potential hostile takeover. SMEC is now up ~40%.

• After the market close on 25 November, it was reported that POSCO Holdings is selling its remaining stake in Nippon Steel Corporation in a block deal sale.
• The block deal sale involves selling the remaining 39.2 million shares of Nippon Steel. The deal is valued at 24.2 billion yen (approximately 227 billion won). 
• Given the overall negative sentiment on POSCO’s potential acquisition of HMM, until this uncertainty is resolved, POSCO Holdings’ share price could continue to face stiff headwinds. 

• SK Biopharmaceuticals (326030 KS) reported record high quarterly earnings in 3Q25 on surging U.S. sales of Xcopri, which surpassed quarterly revenue of $100M for the second time.
• Revenue from Xcopri in the U.S. increased 52% YoY (accelerated from 47% YoY reported in 2Q25) and 12% QoQ to record high of KRW172B, on enhanced marketing efforts.
• For full-year 2025, SKBP guided for Xcopri U.S. revenue of $420–450M (~KRW570–610B), up 31–40% YoY. During first nine months of 2025, Xcopri U.S. revenue reached $325M (KRW460M).

• Despite the higher probability of the cancellation of treasury shares by Lotte Corp, we believe that its worsening balance sheet is a greater concern. 
• There does not appear to be a rapid business turnaround of its major affiliates including Lotte Chemical. As a result, we are concerned about further credit downgrades in 2026/2027.
• Our base case NAV valuation of Lotte Corp is market cap of 2.2 trillion won or target price of 20,918 won per share, which is 29% lower than current price.

• Shinyoung Securities demonstrates a compelling value proposition with a low price-to-book ratio and a consistent, high dividend yield, appealing to value and income-oriented investors.
• Despite strong multi-year growth in net income and EPS, the company exhibits significant top-line volatility and deeply negative operating cash flows, raising concerns about the quality and sustainability of its earnings.
• The firm operates in the highly competitive and cyclical South Korean securities industry, facing pressures on margins and earnings streams that are heavily influenced by macroeconomic conditions and market trading volumes.

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