Daily Brief South Korea: SK Hynix, Golfzon Holdings, Korea Industrial, Cmg Pharmaceutical and more

• After losing 58% of its value from its peak at the end of June, SK Hynix (000660 KS) started a recovery and it may close this week up.
• If confirmed on Friday, this would be the stock first weekly positive close since June 19th, roughly 2 months ago.
• This insight leverages our model to assess whether SK Hynix‘s current trend pattern indicates the start of a new rally or merely a dead cat bounce.

• Back on the 29th June, Golfzon Holdings (121440 KS)‘s largest shareholder Kim Won-il (via SJ Investments) launched a tender offer for the remaining 36.15% of Golfzon not owned, at ₩6,700/share.
• At 0.35x P/B, it was an egregiously low-balled bid. Kim secured 62.9% of the target volume in the tender offer, increasing his stake to 76.85% from 55.36% (85.2% excluding treasuries).
• Undeterred, Kim has reloaded. At the same ₩6,700/share Offer Price. Trading almost at terms. This Tender closes on the 2nd September. Do not tender. Hold off for a bump. 

• Korea Industrial is a key player in the South Korean animal feed market, with secondary operations in corrugated packaging and other materials. The company’s financial performance has been marked by significant net income growth in recent years, though revenue has remained relatively flat.
• The company faces a highly competitive and fragmented market, with larger, more integrated players like Harim Co., Ltd. posing a significant challenge. Its future growth is closely tied to the stable, albeit slow-growing, South Korean livestock and meat consumption trends.
• Valuation appears attractive compared to peers on a Price-to-Book basis, but key risks include volatility in raw material costs, potential for livestock disease outbreaks, and ongoing competitive pressure limiting margin expansion.

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• KRX Administrative Designation on August 13, 2026, due to “penny stock” (주가 미달) status is CMG’s primary existential crisis. The company’s share price fell below the 1,000 KRW threshold for 30 consecutive trading days, triggering the alert under the newly-tightened listing maintenance rules. To combat this, management is pushing a defensive 10-to-1 reverse stock split (주식병합) at a special general meeting on September 2, 2026, though historical precedents suggest this rarely solves the underlying valuation destruction.
• The company’s capital is being heavily drained by CHA Group’s grand, non-core strategic ambitions, particularly the 150 billion KRW Pangyo Cell Gene Biobank (CGB) project. CMG is carrying a disproportionate 40% funding burden for this CGT CDMO facility, forcing it to take on 41.5 billion KRW in long-term borrowings in Q1 2026, which has ballooned its liabilities to 117.6 billion KRW and severely strained its balance sheet.
• Commercialization of its FDA-approved schizophrenia film drug, Mezofy, remains stalled 16 months post-approval. Despite securing FDA clearance in April 2025, commercial launch is delayed due to pricing negotiations and US partner securing hurdles, while the domestic business has been decimated by an outsourcing transition to CSOs, driving service fees (지급수수료) to a staggering 43.2 billion KRW in FY2025 and generating a 2.9 billion KRW operating loss in Q1 2026.

• ADR chatter is building for October, but there is still no solid Yeouido read. Political, regulatory and Square 20% constraints make an aggressive buyback plus ADR primary a tough call.
• Base case remains a late execution for the special dividend and buyback, preserving flexibility around FCF volatility rather than committing to an aggressive schedule upfront.
• We should assign low odds to Hynix front loading the buyback and executing aggressively within a tight window to facilitate a new ADR issuance.