Daily Brief South Korea: SK Square , Silicon2, Seers, Hyundai Motor , Wrtn, K Bank, SK Innovation, Cs Holdings, Samsung KODEX AI Semiconductor ETF and more

• Hynix has bought back 3.25mn shares, or 13.5%, in six days. At the current 650K daily pace, it should finish October 19, a month ahead of the November 19 deadline.
• The early buyback finish is not unusual, but its timing near the October 8 ADR lockup expiry revives chatter around a potential follow on ADR issuance.
• Square could sell the 68bp stake via a secondary ADR, potentially funding a special dividend for Chey’s ₩1T divorce settlement. Watch September filings for fungibility signals and ADR arb timing.

• Glenwood Credit, a Korean PE firm, is looking to sell its stake in Silicon2 (257720 KS) , which it holds through a special purpose vehicle Silk Investment Purpose. 
• Silicon2 is a global distribution company that sell products from South Korean cosmetic brands mainly across Europe, America and other parts of Asia.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Seers (458870 KS) is a digital healthcare firm in Korea that specializes in wearable medical biosensors, artificial intelligence (AI)-driven clinical data analysis, and remote patient monitoring (RPM) platforms.
• Given the company’s surging sales and profit growth, I believe it deserves to trade at 20x P/E. 
• Assuming consensus net profit estimate of 86.8 billion won, a 20X P/E suggests market cap of 1.7 trillion won, representing 110% upside from current levels (about 44,000 won per share). 

• Hyundai Motor announced a major share cancellation involving 2.51 million treasury shares [1.29 million common shares (0.6% of common shares) and 1.21 million preferred shares (2% of preferred shares)]. 
• Overall, I think there were some disappointment with the level of cancellations for common shares but not for preferred shares.
• In my view, Hyundai Motor’s preferred shares are likely to outperform the common shares in the next 6-12 months amid this treasury shares cancellation announced today. 

• Sacra estimates that Wrtn generated $33M in revenue in 2025, up 15x from $2.2M in 2024, as it introduced paid character chat in Korea and expanded its interactive storytelling model into Japan.
• Wrtn is targeting $145M in full-year 2026 revenue across Crack, Kyarapu, OOC and its early-stage enterprise AI business.
• Wrtn closed its Series C on August 26, 2026, raising approximately $100 million.

• Upcoming Overhang Pressure and FI Trapping: K Bank’s 6-month lockup expiration on September 5, 2026, will release 23% of the stock to pre-IPO financial investors. However, with K Bank currently trading at 5,620 KRW—well below its IPO price of 8,300 KRW and the FIs’ estimated acquisition cost of 6,500 KRW—immediate selling pressure may be muted as institutional sponsors are reluctant to crystallize heavy paper losses.
• The Upbit Funding Double-Edge: The Virtual Asset User Protection Act has structurally damaged K Bank’s profitability. Once a source of zero-cost, sticky deposits, Upbit’s 5 trillion won in user balances (comprising 20% of total deposits) now requires a 1.3% minimum interest payout, dragging K Bank’s Net Interest Margin (NIM) down from 2.4% in 2023 to 1.4% in 2025.
• Regulatory Ceilings and the Pivot to SME/SOHO: Rigid Financial Services Commission (FSC) household debt growth caps (briefly eased from 1.5% to 3.0% in August 2026) and the 30% mid-to-low credit lending mandate are forcing K Bank into real estate-backed SOHO loans. While this skirts consumer lending ceilings, it has caused K Bank’s debt-sale ratio for vulnerable borrowers to surge from 0.20% to 1.40%, signaling mounting credit risk.

• The absorption of SK IE Technology (SKIET) by SK Innovation is a tactical containment strategy designed to prevent SKIET’s standalone credit and refinancing risks from triggering a group-wide downgrade, taking on 100% of the operational losses in exchange for an estimated 60 billion won in annual cost synergies and a path to EBITDA breakeven in two years.
• The merger’s pricing directly exploits a narrow regulatory gap, utilizing the legacy market-value-based formula just days after the National Assembly passed the new “fair-value” merger amendment on August 20, 2026, effectively locking in an ultra-low valuation of 14,783 won per share for SKIET before the law takes effect in late 2026.
• Deleveraging has replaced market share as the core top-down KPI dictated by the SK SUPEX Council, driving aggressive asset optimization—including the sale of the Changzhou plant to SEMCORP for 88.8 billion won and the $2.6 billion CPS buyback of SK On—to manage intense rating pressures from Moody’s (Ba1) and S&P (BBB-).

• I had a little bit of a moment when looking at Korean stocks.
• I looked at pros and cons (mostly tax wise) for insiders to actually return more capital and came to the conclusion that a lot of these net nets will likely stay cheap forever.
• Or until some drastic new legislation goes into effect (which I don’t see evidence of).

• Targeted Core Exposure to Korea’s Semiconductor Giants: Samsung KODEX AI Semiconductor ETF (395160 KS) serves as South Korea’s premier thematic exchange-traded fund designed to capture the structural growth of artificial intelligence and system semiconductors, tracking the FnGuide System Semiconductor Index with assets under management (AUM) exceeding KRW 4.0 trillion.
• High-Conviction Portfolio Concentration: The fund features a concentrated allocation heavily weighted in industry bellwethers—Samsung Electronics, SK Hynix, SK Square, and Samsung Electro-Mechanics—which collectively represent over 90% of total assets, offering institutional investors an efficient, high-beta vehicle for the AI hardware and High Bandwidth Memory (HBM) supercycle.
• Institutional Liquidity and Low Tracking Friction: Managed by Samsung Asset Management with a competitive Total Expense Ratio (TER) of 0.45%, the ETF offers tight tracking efficiency, deep secondary market liquidity, and modest distribution yields (latest yield of 0.09%), functioning as a primary vehicle for thematic semiconductor asset allocation.

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