Although the stock market has risen compared to a year ago, the undervaluation of domestic listed companies remains largely unresolved. In the securities market, the number of companies with a price-to-book ratio (PBR) below 1 has stagnated, while those with a PBR below 0.5 have increased. In contrast, the KOSDAQ market has seen a significant rise in the number of companies with a PBR below 1, expanding the base of undervalued firms.
According to the Korea Exchange on September 14, the number of companies on the KOSPI and KOSDAQ with a PBR below 1 increased from 1,257 last year on September 11 to 1,473 this year, a rise of 216. By market, the KOSPI saw a slight decrease from 557 to 554, indicating no significant change, while the KOSDAQ increased from 700 to 919, an increase of 219.
Examining the markets reveals that the patterns of undervaluation in the KOSPI and KOSDAQ have deepened in different ways. The number of companies with a PBR below 0.5 rose from 301 to 347 in the KOSPI, while in the KOSDAQ, it surged from 234 to 409, an increase of 175. The KOSPI has seen a rise in the number of companies remaining in the 'severely undervalued' category, while the KOSDAQ has experienced both an increase in the number of undervalued companies and the degree of undervaluation.
Notably, the undervaluation trend in the KOSDAQ is not confined to specific sectors but is spreading across various fields. The number of companies with a PBR below 1 in the information technology (IT) services sector increased from 61 to 113, marking the largest increase. The general services sector rose from 31 to 60, the pharmaceutical sector from 29 to 53, and the entertainment and culture sector from 23 to 42.
A similar trend is observed for companies with a PBR below 0.5. In the entertainment and culture sector, the number of such companies increased from 4 to 24, while the retail sector saw an increase from 22 to 40. General services and IT services also saw increases of 16 and 15, respectively.
Kim Yu-mi, a researcher at Kiwoom Securities, noted in a recent report, "The proportion of companies with a PBR below 1 in the combined KOSPI and KOSDAQ is 51%, which is high compared to major countries. Among these, the proportion of companies with net cash exceeds 50.1%."
In this context, the exchange plans to announce its first list of low PBR companies on November 2, following the guidelines established on October 10. In the securities market, companies with a cumulative PBR in the bottom 25% over the past three years (six half-years) will be included, while the KOSDAQ will include companies in the bottom 10%.
Na Seung-doo, a researcher at SK Securities, cautioned, "Many companies with limited communication with investors should be aware that failing to prepare in advance could lead to increased costs after the implementation of the low PBR company announcement system."
* This article has been translated by AI.
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