South Korea Archives | Page 2 of 126 | Smartkarma

• Three main reasons why SK Inc is our high conviction in 2026 include mandatory cancellation of treasury shares, deep discount to NAV, and the end of divorce for Chairman Chey. 
• SK Inc has 17.98 million shares in treasury, representing 24.8% of outstanding shares. Among the stocks included in KOSPI200, this is one of the highest percentage of treasury shares.
• Our NAV valuation analysis suggests NAV of 28 trillion won or NAV per share of 386,469 won. This represents a 46% upside to its current price.

• In this insight, we review our Korean Small Cap Gem insights that we published in 2025. We published 18 Korea Small Cap Gem Series insights in 2025.
• The 18 Korean Small Caps have generally performed well this year. They were up on average 17% and 45%, respectively one week and two weeks after the insights were published.
• Some of the best performing stocks so far this year include Chunil Express (000650 KS), Aurora World (039830 KS), Makus Inc (093520 KS), and Flitto Inc. (300080 KS). 

• The next policy swing is mandatory tender offers (MTO), with the gov’t + ruling party pushing for passage this session, likely alongside the mandatory treasury-share cancellation.
• 2022 FSS/FSC 50%+1 trigger scrapped; 25% stays. Ruling party favors 50%+ MTO, base case 100%, but pushback may reduce to 70–80%.
• MTOs tighten discounts, benefit minority holders; focus on local holding firms, PE-backed exits, and parent-driven M&A prospects.

• In this insight, we review the major tender offers of Korean companies in 2025. Some of the major M&A tender offers in 2025 include HMM, Kolon Mobility Group, and VIOL.
• The tender offers have mostly been profitable for the investors in these targeted companies (especially those shareholders who owned these shares prior to the tender offer announcement).
• What is also impressive is that even after the 1st day of trading (post tender offer announcement), there have been extra alpha for the following week.

• Hanyang Eng is a key enabler of the high-tech industry, specializing in the construction of facilities for semiconductor and display manufacturers, which positions it to benefit from the ongoing global investment in chip production.
• The company demonstrates strong financial health, characterized by consistent revenue growth, robust profitability, and a strong dividend profile, making it an attractive value and income investment.
• While heavily exposed to the cyclical nature of the semiconductor industry, Hanyang Eng is diversifying its business into bio-pharmaceuticals, aerospace, and green energy, potentially mitigating long-term risks and opening new growth avenues.

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• It was reported that Hong Ra-Hee plans to give all of her 1,808,577 shares in Samsung C&T (1.06% stake) to her son Lee Jae-Yong on 2 January 2026. 
• After this stake transfer, Lee Jae-Yong’s stake in Samsung C&T will rise to 20.82% and Hong Ra-Hee will no longer have any stake in Samsung C&T. 
• Higher ownership of Samsung C&T by Lee Jae-Yong will likely place a bigger focus on Samsung C&T, especially on its importance as a quasi-holding company of the entire Samsung Group. 

• KakaoBank is a dominant digital-only bank in South Korea, leveraging the vast user base of the KakaoTalk messenger platform to achieve significant market penetration and rapid growth. Its branchless model provides a structural cost advantage over traditional incumbents.
• The bank is pursuing an aggressive growth strategy focused on expanding its customer base to 30 million and total assets to KRW 100 trillion by 2027. Key initiatives include diversifying into new loan products, enhancing platform services (e.g., advertising, loan comparison), and expanding internationally into markets like Indonesia and Thailand.
• While growth has been robust, the company faces significant risks from intense competition from other digital banks (K-Bank, Toss Bank) and traditional banks’ digital offerings. Furthermore, regulatory uncertainty, particularly concerning its largest shareholder, Kakao Corp., and potential government measures to manage household debt, presents a material headwind.

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• Orion Holdings is a leading South Korean confectionery company with a strong brand portfolio, including the iconic ‘Choco Pie’, and a significant, growing presence in key international markets such as China, Vietnam, and Russia.
• The company is strategically diversifying its business into new growth areas, including beverages, convenient meal replacements, and biotechnology, to build a more comprehensive food and healthcare enterprise.
• Despite robust growth in revenue and net income, the company’s market capitalization has underperformed, suggesting a potential valuation disconnect that may present an opportunity for investors.

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• S&T Motiv is a South Korean manufacturer of automotive components and defense products, with a growing focus on parts for electric and hybrid vehicles.
• The company’s defense segment, which produces small arms for the South Korean military and for export, is expected to be a significant growth driver due to heightened global security concerns.
• While the traditional automotive parts business faces challenges from the decline in internal combustion engine vehicles, S&T Motiv‘s investment in electric vehicle components positions it to capitalize on the shift to electrification.

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• Samsung is positioned as a global hub for the AI Supercycle, driven by a pivot to memory technology, and evidenced by a KRW 450T ($310 billion) local investment plan.
• The Device Solutions division’s Q3 2025 rebound (sales +19% sequentially) and an estimated 43.4% Fwd 2-Yr EPS CAGR support potential upside for the stock
• The company has demonstrated a commitment to enhancing shareholder value by completing its 10T share repurchase program ahead of schedule and maintaining a consistent annual dividend payout through 2026.

• In this insight, we discuss the alpha generation through companies that announced share buybacks in the Korean stock market in October and November 2025.
• We provide a list of 26 companies in the Korean stock market that have announced share buyback programs in October and November 2025.
• There were three companies with more than 300 billion won in market cap that announced share buybacks in the past two months with at least 1% of outstanding shares.

• Market eyed 25% top rate, but 30% is still punchy; <100 people hit it, lower than before, giving big shareholders incentive to rotate back into dividends.
• The new regime hits only companies with 25% payout last year and +10% YoY dividend: lower than the original draft, and the 10% bump is a solid positive.
• Companies >5tn KRW with ≥25% payout last year must boost dividends +10% YoY to get the tax cut; Samsung could add ~1tn KRW, potentially easing its pref discount.

• FSC confirms December rollout; beyond procedural cleanup, this structural shift in flows brings small-to-mid shops and offshore retail, creating new order patterns in the local market.
• Omnibus accounts aggregate orders under one broker, blurring classic smart-money signals, slowing local retail follow-ons, and creating wider price-action gaps in the order book.
• MSCI volatility trades also require attention; the omnibus rollout will likely intensify flows as new accounts follow major institutions, impacting the Korea sleeve short-term.

• The review period for the March rebalance of the KOSPI Size Indices will commence on 1 December and will end on 28 February.
• Nearing the start of the averaging period, we forecast 34 migrating stocks. Among new listings, 1 stock could be added to LargeCap, 2 to MidCap and 2 to SmallCap.
• The upward migrations have outperformed the downward migrations by a lot over the last 3 months. The gap in returns versus the KOSPI2 INDEX is a lot smaller.

• IT adds barely move (~0.1x DTV), but Heavy Industries pops: Sanil/Hanwha Engine draw ~0.4x DTV inflows, while Hanwha Vision faces ~0.6x DTV passive outflow.
• June precedent: HD Marine Solution grabbed ~0.3x DTV extra inflow and ripped ~12% pre-rebalance, handily outperforming the tape and other KOSPI 200 adds.
• Play the same setup: focus on Heavy Industries flow pockets—Sanil, Hanwha Engine, Hanwha Vision out—and eye entries starting Monday ahead of the Dec 8 go-live.

• There appears to be a M&A battle heating up for APlus Asset Advisor. This is because it was reported that Aplus Asset Advisor Chairman Kwak Geun-ho has increased his stake.
• Chairman Kwak Geun-ho purchased additional 30,904 shares of Aplus Asset’s common stock over three trading days and his stake increased by 0.14 percentage points from 20.06% to 20.20%.
• In the next 3-6 months, we expect additional upside to the stock price (to 10,000 won to 12,000 won) as more investors perceive this could be an attractive M&A target.

• On 26 November, Naver Financial and Dunamu finalized the merger ratio. Under the proposed share swap, one share of Dunamu will be exchanged for 2.54 shares of Naver Financial. 
• Dunamu’s equity value is 15.1 trillion won, and Naver Financial’s is 4.9 trillion won.
• Overall, we have a positive view of this merger and it is likely to positively impact Naver’s share price as well. 

• 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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• The proposed bill fully closes the treasury-share loopholes, bans all exchangeable/pledge uses, blocks M&A allocations, and imposes strict cancellation deadlines—1 year for new buys, 6 months for existing.
• The amendment tightens disposal rules: no cancellation means pro-rata sales to existing shareholders only, shutting down selective deals and closing the wide-open disposal gap under current law.
• The proposal is far tougher than expected, likely to become the final version, and should drive a near-term mandatory-cancel narrative and notable price action in governance-sensitive holding-co names.

• After the market close on 24 November, it was announced that Align Partners is conducting a partial tender offer of a 10% stake in Gabia Inc (079940 KS). 
• Tender offer price is 33,000 won (20% higher than current price). Tender offer amount is 44.7 billion won. 
• If Align Partners successfully completes this tender offer, its stake would rise to 19.03%. Plus, the combined stakes of Align Partners and Miri Capital would be 42.99%. 

• On 24 November, the SNT Group formalized its hostile takeover of Smec. S&T Holdings  disclosed that it acquired an additional 5.46% stake in SMEC, raising its stake to 13.65%.
• S&T Holdings and SNT Group Chairman Choi combined own a 20.2% stake in SMEC. In comparison, the SMEC CEO Choi Young-seop owns a 9.75% stake in SMEC.
• In our view, this is likely to lead to a potential fight for the control of SMEC’s management rights, pushing up the share price of SMEC even further.

• Smec Co Ltd is a South Korean company with dual exposure to the cyclical machine tool industry and the evolving telecommunications sector. Its machinery division, rooted in Samsung Heavy Industries, produces CNC lathes, machining centers, and robotic automation solutions. The ICT division provides various gateway solutions.
• The company is strategically positioned to benefit from the growth in factory automation and the transition to electric vehicles (EVs), which require advanced manufacturing equipment. Recent corporate actions, including a significant stake acquisition by SNT Holdings with the stated purpose of influencing management, could signal a strategic shift and a more aggressive approach to enhancing corporate value.
• Despite a strong growth track record in revenue and net income over the past several years, the company faces intense competition from larger domestic players and is susceptible to the capital expenditure cycles of its key end-markets. The lack of a consistent dividend payment may be a deterrent for income-focused investors.

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• Recent quarters operating numbers for Samsung SDI (006400 KS) is quite poor and have caused the share price to decrease accordingly. 
• The share price has rallied on the back of the news on Tesla’s new business to order ESS from Samsung SDI. 
• At what level shall investors start to accumulate Samsung SDI. 

• If the three non-IT names exit IT, passive flows hit hard: SK Square/LG Electronics ~0.4× DTV out, LG Corp ~0.8× DTV out, new IT entrants ~0.2–0.25× DTV in.
• If KRX surprises next Tuesday, kicking three names from IT, expect immediate tape reaction—market memory exists, but the scenario isn’t priced, unlike 2023 Kakaopay, so instant price impact is likely.
• If this happens, June 11 turns into a chunky basket-flow day: SK Square (~15% weight) out, next-tier caps see ~0.15–0.2× DTV inflow, except ultra-liquid names like Hanmi Semi.

• In this insight, we provide the top 10 stock picks and key catalysts in the Korean stock market for the next two weeks (21 November to 5 December 2025).
• Our top 10 picks in the past two weeks (7 to 21 November) were up on average 1.4% this period, outperforming KOSPI which was down 2.5% in the same period.
• Our top 10 picks in the next two weeks include LG CNS, Hana Financial, Orion Corp, KT&G, Naver, KEPCO E&C, Hanmi Pharm, Amorepacific Corp, LG Chem (Pref), and SK Inc.