[Edaily Kim Hyung-il, Shin Ha-yeon ] Starting this November, a list of so-called “low PBR” listed companies—those whose price-to-book ratio (PBR) has remained in the lower tier of their respective sectors for an extended period—will be released. Companies mentioned as potential candidates include Harim Holdings Co., Ltd.(003380), Youngpoong(000670), and SAMYANGHOLDINGS(000070). PBR is an indicator that shows at what level a company’s stock price is trading relative to its net assets; a lower figure means the company is undervalued by the market relative to its net asset value.

◇ “Clear Results from Companies Disclosing Value-Up Initiatives”… Improvements Expected Amid Pressure to Disclose
According to a comprehensive analysis of data from the Korea Exchange’s Corporate Disclosure Channel (KIND) conducted by Edaily on the 21st, a total of 122 KOSPI-listed companies and 76 KOSDAQ-listed companies ranked in the bottom tier of their respective sectors in terms of PBR from 2023 to 2025, as well as in the first half of this year. Among these, only 36 KOSPI-listed companies (29.5%) and 12 KOSDAQ-listed companies (15.8%) disclosed corporate value enhancement plans.

Once designated as a low-PBR company, the company’s name is published on the Korea Exchange’s website, and a “low-PBR” tag appears on securities firms’ mobile trading systems (MTS) and home trading systems (HTS). The Exchange has allowed companies that disclose corporate value enhancement plans—including a low-PBR improvement plan—by October 22 to be excluded from the initial announcement on November 2 for a period of one year. Simply disclosing a corporate value enhancement plan is not sufficient; companies must also submit a separate “PBR improvement plan.”

The “low PBR” disclosure is not based on a simple comparison of the PBRs of all listed companies. The exchange categorizes companies into 11 industry groups according to the Global Industry Classification Standard (GICS) and identifies companies with the lowest PBRs within each group. The threshold is the bottom 25% for the KOSPI and the bottom 10% for the KOSDAQ.

Notable companies that ranked in the bottom tier of their respective sectors at all four assessment points include, on the KOSPI, Youngpoong ( HYUNDAI STEEL(004020)), SAMYANGHOLDINGS ( HDC HOLDINGS CO.,Ltd(012630)), and KOLON CORPORATION(002020). On the KOSDAQ, companies such as KCC ENGINEERING & CONSTRUCTION CO., LTD.(021320), KOOK SOON DANG CO., LTD.(043650), Harim Holdings Co., Ltd., and KYUNG NAM PHARM.CO.,LTD.(053950) made the list. In the first half of this year, PBRs were as follows: Youngpoong at 0.18x, KCC ENGINEERING & CONSTRUCTION CO., LTD. at 0.19x, HYUNDAI STEEL at 0.19x, SAMYANGHOLDINGS at 0.2x, KYUNG NAM PHARM.CO.,LTD. at 0.25x, KOOK SOON DANG CO., LTD. at 0.27x, Harim Holdings Co., Ltd. at 0.28x, HDC HOLDINGS CO.,Ltd. at 0.32x, and KOLON CORPORATION at 0.32x.

There are expectations that the disclosure of companies with low PBRs will promote increased shareholder returns and help resolve the “Korea discount.” According to the Korea Capital Market Institute, the stock price index for companies participating in the “Value-Up” disclosure program—set at 100 at the end of 2023—rose to 203.3 by the end of March this year. For non-disclosing companies, the index stood at 134.5, resulting in a cumulative return gap of 68.8 percentage points. At the end of last year, the ROE of KOSPI-listed companies that made “Value-Up” disclosures also exceeded that of non-disclosing companies, at 11.2% versus 4.1%, and their dividend payout ratio was 30.5%, higher than the 14.1% for non-disclosing companies.

However, some interpret this as reflecting the active participation of companies with strong profitability and the capacity for shareholder returns, rather than the direct effect of the “Value-Up” disclosure itself. Lee Geon-jae, Head of the KOSDAQ Research Center at IBK Investment & Securities, emphasized the significance of the system’s intent, stating, “The disclosure of companies with low PBRs is both a conveyance of facts and a restoration of shareholders’ rights that have been consistently upheld.”

◇ Companies “Concerned About Stigma Ignoring Industry Characteristics”… Controversy Over the Effectiveness of the Disclosure System

The responses from companies facing the low PBR disclosure were mixed. While some were not preparing corporate value enhancement plans, others did not fully understand the system itself. Concerns were also raised that companies might be perceived as “failing to implement value-up measures” even if their low PBRs stemmed from industry-specific characteristics, economic cycles, or capital investments.

An official from a non-semiconductor company stated, “Even if sales or profits are rising steadily, the market does not recognize that value, so the company remains undervalued.” An official from a KOSDAQ-listed company also said, “We are concerned that we might be negatively perceived as a company lacking the will to implement value-up measures or as a poorly managed company simply because we are subject to disclosure,” adding, “It is necessary to evaluate each company’s specific circumstances, improvement plans, and the actual implementation process together.”

When considering the total number of companies by industry sector, differences in the distribution of low-PBR companies also emerged. Based on combined KOSPI and KOSDAQ data, 38 out of 304 (12.5%) companies in the materials sector, 19 out of 156 (12.2%) in the consumer staples sector, and 2 out of 17 (11.8%) in the energy sector were ranked in the bottom tier at all four measurement points. In contrast, the information technology sector had a relatively low proportion, with 28 out of 633 companies (4.4%) falling into the bottom tier.

However, the actual list to be announced in November may change. This is because the stock exchange calculates the final PBR using the daily average market capitalization over the most recent 20 trading days—including the PBR reference date—and the net asset value from the most recent periodic report as of the reference date.