[Edaily Reporter Shin Ha-yeon ] A total of 151 listed companies—including HANWHA LIFE INSURANCE(088350)and HYUNDAI STEEL(004020), both with market capitalizations in the 3 trillion won range, as well as LOTTE SHOPPING CO., LTD.(023530), LOTTE CHEMICAL CORPORATION(011170), and E-MART Co., Ltd.(139480) —are being publicly designated for the first time as “low PBR companies,” meaning they have long been undervalued. As the Korea Exchange (KRX) releases this list of undervalued companies and displays it on securities firms’ stock trading screens, market calls for these companies to expand shareholder returns and enhance their corporate value are expected to grow louder.

The Korea Exchange (KRX) announced on the 1st that it would select and publicly disclose a total of 151 companies—96 from the KOSPI market and 55 from the KOSDAQ market—as “low PBR companies” for the first time on the 2nd. This measure was introduced as a follow-up to the “Capital Market Structural Improvement Plan” jointly announced by relevant agencies last March, with the aim of encouraging companies that have been undervalued for a long time to voluntarily enhance their corporate value.

Among the companies listed, the one with the largest market capitalization on the KOSPI is HANWHA LIFE INSURANCE(088350). Based on the closing price on the 30th of last month, its market capitalization was 3.574 trillion won, and the price-to-book ratio (PBR) calculated by the exchange was 0.27x. HYUNDAI STEEL(004020)followed with a market capitalization of 3.4496 trillion won and a PBR of 0.19x. LOTTE SHOPPING CO., LTD.(023530)(2.3168 trillion won, 0.17x), LOTTE CHEMICAL CORPORATION(011170)(1.9719 trillion won, 0.18x), and E-MART Co., Ltd.(139480)(1.8670 trillion won, 0.15x) were also included on the list.

PBR is a metric calculated by dividing a company’s market capitalization by its book value. If a company’s PBR is 0.27x, as in the case of HANWHA LIFE INSURANCE, it means its market capitalization is approximately 27% of its book value. In the case of E-MART Co., Ltd., this means that when its book value is 10,000 won, it is valued at 1,500 won on the stock market. However, since a low PBR can reflect factors such as profitability and growth prospects, the difference from book value cannot be directly interpreted as the extent to which the stock is undervalued relative to its fair value.

TaekwangIndustrial(003240)(915.2 billion won, 0.23x), DL(000210)(844.5 billion won, 0.24x), KoreaLine(005880)(617.7 billion won, 0.27x), LX HOLDINGS(383800)(592.7 billion won, 0.29x), E1Corporation (570.1 billion won, 0.28x) followed, ranking among the top 10 by market capitalization out of the 96 companies subject to low PBR disclosure on the KOSPI market. Next in order were Youngpoong(000670)(569.8 billion won, 0.17x), SeAHHoldings(058650)(480.1 billion won, 0.21x), Samyang Corporation(145990)(436.8 billion won, 0.29x), HYUNDAI MOTOR SECURITIES(001500)(436.5 billion won, 0.31x), and DB Financial Investment Co., LTD.(016610)(414.3 billion won, 0.33x).

In the KOSDAQ market, EUGENE Corporation(023410)had the largest market capitalization among the companies subject to disclosure, at 245.5 billion won. Its PBR was 0.26x. This was followed by Han Kook Capital Co., Ltd.(023760)(210.0 billion won, 0.28x), DongwonDevelopment(013120)(180.3 billion won, 0.17x), Spigen Korea Co., Ltd(192440)(170.9 billion won, 0.31x), and TK CHEMICAL CORPORATION(104480)(156.8 billion won, 0.12x).

The companies included in this announcement are those whose PBR has remained at a low level for an extended period within their respective markets and sectors. For the KOSPI market, companies that fell within the bottom 25% over a cumulative three-year period were selected, while for the KOSDAQ market, those in the bottom 10% were chosen. Specifically, companies must have met the criteria for six consecutive half-years or in six out of the most recent seven half-years. Sectors are classified into 11 categories based on the Global Industry Classification Standard (GICS).

The exchange calculated the PBR for 2,431 companies—excluding those subject to delisting as of the 22nd of last month—based on their average daily market capitalization over the 20 trading days from September 21 to October 22, as well as the total capital reported in their most recent annual and semi-annual reports. Of these, 185 companies met the low-PBR criteria. However, the final list was finalized after excluding 34 companies from the announcement—those that had already disclosed corporate value enhancement plans, including PBR improvement plans. This is a measure designed to encourage companies to present plans to address their undervaluation.

This exception was not applied to companies that have been undervalued for an extended period. If a company meets the low PBR criteria for 12 consecutive half-years or in 12 out of the most recent 13 half-years, it will be included on the list even if it has disclosed an improvement plan. Fifteen companies remain on the list because they continued to meet the undervaluation criteria for a cumulative total of six years, even after submitting actual improvement plans.

The list will be available on the “Value-Up” page of KIND, the exchange’s listing disclosure system, until the day before the next disclosure date, May 4 of next year. A “Low PBR” tag will also appear on securities firms’ mobile trading systems (MTS) and home trading systems (HTS). The timing and method of display vary by securities firm.

The exchange plans to provide one-on-one, customized PBR improvement consulting to all 151 companies subject to disclosure next year. This involves analyzing the causes of undervaluation and assisting with goal setting and plan formulation. The Financial Services Commission is also pushing to revise the Stewardship Code guidelines to encourage institutional investors to engage with shareholders of low-PBR companies.

Meanwhile, market analysts advise that investors should select companies that are actively working to resolve their undervaluation rather than judging investment appeal solely based on a low price-to-book ratio (PBR). From an investor’s perspective, a company’s response following the list’s publication is expected to be a key criterion for evaluation. This is because for a low PBR to lead to a revaluation of corporate value, it must be supported by changes such as improved profitability or expanded shareholder returns.

Na Jeong-hwan, an analyst at NH INVESTMENT & SECURITIES, said, “Even companies that have not been proactive in shareholder returns will have no choice but to consider them more actively once they are listed on the low-PBR list,” adding, “It is necessary to keep a close eye on companies that actively issue value-enhancement disclosures in response to the list’s release.”