First 'Undervalued' Label Sparks Stock Surge: Will Corporate Value Rise?

[Anchor]

A list of 151 companies whose stock prices have long been undervalued compared to their assets has been unveiled. Major conglomerates such as Hyundai Steel and E-Mart made the list. Despite the "undervalued" tag, their stock prices actually surged.

Reporter Kim Gi-tae has the details.

[Reporter]

This is a screen from a domestic mobile stock trading service.

A red "Low PBR" label has been attached to the detailed information of several stocks.

PBR, or price-to-book ratio, is calculated by dividing market capitalization by net assets, showing how many times a company's stock price is trading relative to its net assets.

A figure below 1 means that the money generated from liquidating all of the company's assets would be greater than its market capitalization.

The list of low-PBR companies recently released by the Korea Exchange totals 151 firms, including those on the Kospi and Kosdaq markets.

Major companies with a market capitalization exceeding 1 trillion won, such as Hyundai Steel, Hanwha Life, Lotte Shopping, and E-Mart, were also included.

On the first day of trading under the undervalued label, the stock prices of 7 out of 10 companies jumped.

Hyundai Steel rose by nearly 11%, Lotte Shopping by 8%, and E-Mart by over 6%.

This is interpreted as a reflection of expectations that companies will expand shareholder returns to shed their undervalued status, such as increasing dividends or buying back and retiring treasury shares.

Financial authorities explained that this is a policy to induce voluntary changes among companies.

[Lee Seok-hoon, Senior Research Fellow at the Korea Capital Market Institute: The biggest goal is not to point fingers saying you did well or you did wrong, but rather to expand market monitoring through such measures... and guide corporate changes.]

On the outside, companies stated, "We will do our utmost to boost our stock prices."

However, some complaints are emerging that it is merely a form of public shaming, pointing out that there are various reasons for low valuations, such as having substantial assets but poor business performance.

Under pressure to boost stock prices, the concerns of the targeted companies are expected to deepen.

(Video Editing: Jung Yong-hwa, VJ: Jung Han-wook)
※ Please note: This article was translated by AI and may contain errors.