Daily Brief South Korea: SK Square , SeAH Besteel Holdings, Nice Information Service Co, Daihan Pharmaceutical, E Credible, E World and more

• SK Hynix and SK Square hit L2 flags; cash-only until Dec 24. Margin off, >40% two-day rip triggers halt. L2 lifts if below T-5/+45%, T-15/+75%, and 15-day high.
• L2’s usually a non-event, but this time the margin freeze probably smacks Hynix harder. Key trigger is staying below the 15-day high: Hynix ₩587,000, Square ₩324,000.
• Govt set to roll out AI-semiconductor holdco deregulation this week, boosting AI holdcos like Square and juicing a near-term Square-over-Hynix trade opportunity.

• In 2026, one of the emerging investment themes will likely be the main value-chain suppliers to SpaceX which is gearing up for a huge IPO next year.
• Seah Besteel Holdings is expected to be one of the specialty steel suppliers to SpaceX. Seah is investing about US$155 million to build a special alloy plant in the US.
• In addition to SpaceX, Seah Besteel Holdings plans to gain additional major US customers including Boeing Co (BA US), Lockheed Martin (LMT US), GE Aerospace, and Pratt & Whitney.

• Dominant Market Leader in a High-Barrier Industry: NICE Information Service is the largest credit bureau in South Korea, an industry characterized by significant regulatory hurdles and network effects, affording it a strong competitive moat.
• Consistent Financial Performance and Shareholder Returns: The company has demonstrated a solid track record of revenue, net income, and EPS growth over the past decade, complemented by a consistent and growing dividend payout to shareholders.
• Attractive Valuation Relative to Global Peers: NICE trades at a significant valuation discount to its international counterparts like Transunion and Equifax, presenting a potential value opportunity for investors, contingent on its ability to sustain growth and profitability.

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• Dominant Niche Player with Strong Growth: Daihan Pharmaceutical is a leading manufacturer of intravenous (IV) solutions in South Korea, a market poised for steady growth driven by an aging population and increasing healthcare needs. The company has demonstrated a solid track record of revenue and net income growth, outpacing its negative market capitalization trend.
• Exceptional Shareholder Returns and Value Proposition: The company exhibits a robust dividend profile, with a strong yield and a 5-year dividend CAGR of over 17%. Valuation analysis reveals a significant discount compared to peers across key metrics like P/E, P/B, and EV/Sales, suggesting a potentially attractive entry point for value-oriented investors.
• Favorable Industry Tailwinds: The South Korean pharmaceutical market is projected to experience robust growth, with the intravenous solutions segment expected to expand at a CAGR of approximately 8.7% through 2030. This provides a supportive macro environment for Daihan’s core business operations.

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• E Credible is a dominant player in the niche market of corporate credit certification in South Korea, providing essential credit risk information on SMEs to large corporate clients for supply chain management.
• The company is poised to benefit from the growing trend of ESG (Environmental, Social, and Governance) integration in supply chains, having proactively developed ESG evaluation services for SMEs, which presents a significant long-term growth driver.
• Despite a challenging recent growth track record and sensitivity to economic cycles, the company maintains a strong financial position with a high net cash balance, a low-capex model, and a commitment to high dividend payouts, offering an attractive yield.

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• E World is a regional theme park operator in Daegu, South Korea, centered around its landmark 83 Tower. The company is facing severe financial headwinds, characterized by declining revenues, significant and widening net losses, and negative operating cash flows over the past three years.
• The company’s valuation presents a mixed picture. While traditional earnings-based metrics are meaningless due to losses, its Price-to-Book ratio is comparable to peers, suggesting a potential valuation floor based on its physical assets. The Smartkarma ‘Value’ score of 4/5 supports this view.
• The outlook is heavily dependent on a successful operational turnaround and a broader recovery in the regional tourism market. While the South Korean tourism industry shows strong growth prospects, E World‘s ability to capitalize on this trend remains uncertain given its deteriorating financial performance and intense competition.

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