“Tagged as low-PBR, yet stock prices surge?” ... Market stirred by release of list of 151 low-PBR companies

[Financial News] Shares in the companies swung across the board after the Korea Exchange released for the first time a list of 151 listed companies that had remained undervalued on a book-value basis for an extended period. The “low-PBR (price-to-book ratio)” label fueled expectations of higher shareholder returns and share-price gains under pressure to improve corporate value, and those expectations had already been priced in.
But as profit-taking poured in starting the day after the announcement and share-price trends diverged, securities-market observers warned against copycat trading based solely on the label and said investors needed to carefully distinguish the companies with genuine capacity to deliver shareholder returns.
According to the Korea Exchange on the 5th, the low-PBR companies announced on the 2nd comprise 151 firms in total: 96 on KOSPI and 55 on KOSDAQ. Under the Global Industry Classification Standard (GICS), companies that had ranked in the bottom 25% of KOSPI or the bottom 10% of KOSDAQ for six consecutive half-year periods were eligible for designation.
The “low-PBR” tag will be required to appear on the KIND listing disclosure system and next to the companies’ names on home trading systems (HTS) and mobile trading systems (MTS) through May 4 next year.

The market reacted immediately on the first day of the announcement. Of the 151 companies, 115—more than 76%—closed higher. Strong buying was concentrated in major retail and materials stocks, particularly Hyundai Steel (11.61%), Lotte Shopping (9.28%), Korea Line (9.20%), HL D&I (8.37%) and Emart (7.09%). Expectations that companies would unveil aggressive measures to boost corporate value, such as share buybacks and cancellations and higher dividends, to shed the label lifted stock prices.
Some companies took preemptive action. Hyundai Motor Securities proposed a total shareholder return ratio of at least 45% and announced plans to buy back shares within the first quarter of next year, while three Moorim Group companies, including Moorim Paper, formally announced plans to pursue a shareholder return ratio of at least 30%.
But the “brief surge” did not last. On the 3rd, the day after the announcement, the number of companies that rose plunged to 45, while 97 fell. Although stocks with larger market capitalizations maintained relatively solid gains, small-cap stocks—which account for at least 90% of the list—and thinly traded shares gave back much of their gains, exposing the risk of “value traps.”
Of the 96 KOSPI companies on the list, materials (23), including steel and chemicals, and industrials (22), including construction, together account for nearly half. Most companies in these sectors have limited ability to generate cash internally because of chronic industry downturns and weak earnings. The 17 holding companies designated by the Korea Fair Trade Commission are also unlikely to escape the undervaluation trap through dividend increases alone unless the discount caused by the duplicate listing of subsidiaries is resolved, observers say.

When the government announced its plan to improve the capital market’s fundamentals last March, low-PBR stocks including DL (44.7%) and Hanshin Engineering & Construction (37.4%) also surged in the short term. But with no recovery in their industries to support the gains, they eventually gave them all back by just before the announcement.
Experts stress that “naming and shaming”—publicly exposing companies on a list under policy pressure—can prompt them to try to lift their share prices, but the sustainability of those prices ultimately depends on “genuine funds for shareholder returns” and “an earnings recovery in their core businesses.”
Securities analysts advised investors to watch for stocks whose earnings growth in 2026 compared with this year is becoming evident, or whose return on equity (ROE), a measure of capital efficiency, has entered a recovery phase.
Yuanta Securities named Hyundai Steel, Hanwha Life, Lotte Shopping, DL and Korea Line as stocks with the capacity to lift their share prices on the back of earnings growth. Samsung Securities Co., Ltd. highlighted Lotte Shopping, Hanwha Life, DSR Steel, Hyundai Motor Securities and Chong Kun Dang Holdings as promising candidates for valuation re-rating amid an improving ROE trend.
[email protected] Moon Young-jin Reporter