Korea Exchange First Publishes List of 151 Low-PBR Companies, Including 96 KOSPI and 55 KOSDAQ Firms (Starting the 2nd)
Target Companies Average PBR of 0.247x... About One-Fourth of Book Value Net Assets, Vastly Lower than Overall KOSPI Average of 1.43x
Includes Market Caps Exceeding 1 Trillion Won Such as Hyundai Steel, Hanwha Life, Lotte Shopping, and E-Mart; 'Low PBR' Tags Applied to Securities Firms' HTS and MTS
Follow-up to Government's 'Capital Market Restructuring Measures' in March... Exemption Granted for One Year If Improvement Plans Disclosed 7 Trading Days Prior to List Publication
There are as many as 151 companies whose stock prices fall short of even one-fourth of their book value. Today marks the first day the Korea Exchange (KRX) is publicly disclosing listed companies that have been undervalued by sector for three consecutive years as 'Low PBR (Price-to-Book Ratio) Companies'. Starting today, a 'Low PBR' tag will be attached to these stocks on each brokerage's Home Trading System (HTS) and Mobile Trading System (MTS), and the list will be posted on the value-up page of the Exchange's KIND (Korea IR Service) disclosure system until the day before the next publication date on May 4, 2027.
This publication is a follow-up measure to the 'Capital Market Restructuring Measures' prepared by the government last March. Based on 2,431 listed corporations as of the 30th of last month, 185 companies whose PBR remained in the bottom 25% of KOSPI sectors or the bottom 10% of KOSDAQ sectors for the most recent 6 consecutive semi-annual periods or 6 out of 7 semi-annual periods were nominated as candidates. Among them, 34 companies that disclosed their corporate value enhancement plans by October 22 were excluded from the list. The average PBR of the 151 finally selected companies is 0.247x, which is one-sixth of the overall KOSPI average of 1.43x as of the same date. On the KOSPI, companies with a market capitalization of over 1 trillion won—such as Hyundai Steel (0.19x), Hanwha Life (0.27x), Lotte Shopping (0.17x), Lotte Chemical (0.18x), and E-Mart (0.15x)—made the list, along with securities firms like Hyundai Motor Securities (0.31x) and DB Financial Investment (0.33x). On the KOSDAQ, companies with market caps exceeding 100 billion won, such as KCC Construction (0.20x), Spigen Korea (0.31x), Korea Capital (0.28x), and Dongwon Development (0.17x), were also included.
Alongside the list release, the Exchange announced that it will provide 1-on-1 customized PBR improvement consulting—ranging from cause analysis to goal setting—for all 151 companies starting next year. Financial Services Commission Chairman Lee Eok-won stated last March, "We will urge efforts to enhance corporate value for low-PBR companies through a naming-and-shaming approach, such as disclosing lists." However, the design of "exemption upon disclosure" leaves room to become a new formality. In fact, 34 companies avoided publication solely by disclosing improvement plans, and the Exchange explained that some companies even failed to submit plans themselves due to difficulties in diagnosing causes and preparing improvement measures.
The diagnosis that the cause of the Korea Discount lies in a governance structure reluctant to share dividends and profit returns is nothing new. The issue lies in the prescription. A separate review is needed on whether the method of government agencies attaching a 'shame label' to corporate stock prices conflicts with capital market autonomy. Publishing the list is merely providing information, not a prescription, and the core of resolving undervaluation is rearranging market principles such as easing the tax burden on dividend income, overhauling regulations on physical division (spin-offs), and incentivizing treasury stock and cash returns. If the shame label goes out first without tax and regulatory reforms, companies will rush into a disclosure competition just to match numbers, leaving youth investors to bear the burden of distinguishing between true value and disclosure-oriented compliance based on a single tag on their HTS.