Daily Brief South Korea: SK Hynix, D’Alba Global, POSCO Holdings, Orion Corp, Hana Financial, Welcron Kangwon, E&D Co Ltd, Shinpoong Pharmaceutical, SK Bioscience , Top Material and more

• Change in local limit is a positive for SK Hynix (000660 KS) 
• Those in the local markets had to play SK Square (402340 KS) before
• The risk is that over 1/3 of KOSPI 200 is now reliant on 2 names

• There is an end of a lock-up period for 1.3 million shares (10% of outstanding shares) for d’Alba Global starting 22 November 2025.
• This could potentially result in additional selling by insiders which could negatively impact its share price in the coming weeks. We remain Bearish on d’Alba Global.
• The overall proportion of freely tradable shares, which was only 32.7% right after listing, will increase to 83.9% one year later. 

• POSCO is shifting from cyclical steel to sustainable, high-margin materials and hydrogen technologies.
• Earnings recovery and RBM scale-up underpin a 15–35% re-rating potential by FY27.
• Strong asset base, improving margins, and carbon-neutral roadmap limit downside risk.

• Dominant Market Position in High-Growth Emerging Markets: Orion holds a commanding presence in the confectionery markets of Vietnam and Russia, driven by the exceptional brand equity of its flagship product, Choco Pie. Continued capacity expansion in these regions is poised to capture further growth.
• Strong Financial Performance and Shareholder Returns: The company has demonstrated a robust track record of revenue and net income growth, coupled with a significant increase in dividend payouts. This highlights efficient operations and a commitment to returning value to shareholders.
• Diversification and Future Growth Engines: Strategic initiatives to expand into new business areas, including beverages, convenient meal replacements, and biotech, present long-term growth opportunities beyond the core confectionery segment, mitigating reliance on a single product category.

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• Hana Financial remains our buy pick among Korean banks; it is close to the top our scorecard, it remains attractively valued and its returns are improving
• Hana is trading at a large PBV discount to KB Financial; this currently stands at a 30%+ discount which is over one standard deviation from the historical PBV discount mean
• Furthermore, we see that this relatively dovish phase of monetary policy, Hana appears to have more limited downside risk than its peers in terms of further interest spread erosion

• Welcron Kangwon is undergoing a significant transformation, leveraging its legacy in the industrial boiler market to penetrate the high-growth secondary battery equipment sector. This strategic pivot has driven remarkable revenue growth, though profitability and cash flow remain volatile.
• The company is well-positioned to benefit from powerful secular tailwinds, including global industrialization, increasing demand for energy efficiency, and stricter environmental regulations. Its core products, such as waste heat recovery systems, directly address these trends.
• Despite strong top-line momentum, significant risks persist. Financial performance is characterized by fluctuating profitability and deeply negative free cash flow, raising concerns about earnings quality and financial stability. The business model’s reliance on large, project-based contracts contributes to this inherent volatility.

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• E&D Co Ltd is a high-growth, high-risk player in the burgeoning secondary battery and environmental catalyst markets. Its core value proposition lies in its proprietary technologies for producing precursors for electric vehicle (EV) batteries and catalysts for emission control.
• The company exhibits a stellar long-term revenue and net income growth trajectory, driven by strong secular tailwinds in its end markets. However, this growth has been accompanied by extreme volatility in profitability and, most critically, a consistent and severe burn of operating and free cash flow.
• An investment in E&D is a bet on the successful scaling of its operations to meet surging demand and an eventual transition to sustainable positive cash flow. The high uncertainty is balanced by the significant upside potential if the company can overcome its operational and financial challenges.

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• Shinpoong Pharmaceutical is a South Korean pharmaceutical company transitioning from a generics manufacturer to an R&D-focused entity, highlighted by its antimalarial drug Pyramax and a pipeline focused on cardiovascular and neurological diseases.
• The company has experienced significant financial headwinds, with consistent net losses and negative cash flow over the past three fiscal years, although recent quarterly results in 2025 show a marked improvement towards profitability.
• Future growth hinges on the successful clinical progression and commercialization of its key pipeline asset, Otaplimastat (SP-8203) for acute ischemic stroke, and its ability to expand its global market presence for existing products.

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• SK Bioscience (302440 KS) reports 2.5x jump in revenue and narrowing operating loss in 3Q25, driven by additional revenue contribution and improving profitability of German subsidiary, IDT Biologika.
• For 2025, SKBS guided for IDT revenue of KRW410B. With 3Q25 YTD revenue reaching KRW341B (up 19% YoY), IDT is expected to beat the guidance.
• 2026 will be crucial for the company, with couple of vaccine candidates entering late-stage trials. PCV21 global Phase 3 trial is ongoing. This should keep R&D spend elevated.

• Top Material is a South Korean company operating in the high-growth secondary battery materials sector, specifically focusing on the production of cathode active materials (CAMs), a critical component for lithium-ion batteries.
• The company is navigating a volatile market characterized by the rapid expansion of the electric vehicle (EV) and energy storage systems (ESS) industries, which are the primary demand drivers. However, this growth is tempered by intense competition, raw material price fluctuations, and evolving battery chemistries.
• Financial performance has been erratic, with strong growth in 2022 and 2023 followed by a significant downturn in 2024, reflecting industry-wide challenges. The company’s future hinges on its ability to manage costs, secure stable raw material supplies, and align its product development with the dominant battery technologies.

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