The Korea Exchange is set to release its list of companies with low price-to-book ratios (PBR) in one week. Major corporations, including Hyundai Steel and E-Mart, are under scrutiny as they rank among the lowest in their sectors.
According to data from the Korea Exchange's listing disclosure system, Kind, a total of 224 companies were identified as being in the bottom tier of their sectors based on PBR at three points: the end of June 2023, the end of 2024, and the end of 2025.
In the KOSPI market, 132 companies were consistently in the bottom 25% across sectors, while 92 companies in the KOSDAQ market fell within the bottom 10%. The exchange previously indicated that the number of companies subject to the low PBR disclosure would be between 120 and 220. Hyundai Steel (0.19 times), Lotte Chemical (0.20 times), E-Mart (0.17 times), and Hanwha Life (0.21 times) were all below their sector thresholds and are expected to be classified as low PBR companies for the end of 2024 and 2025 as well.
The exchange will publicly disclose the low PBR list for the first time on November 2. Companies in the KOSPI market that fall within the bottom 25% and those in the KOSDAQ market that are in the bottom 10% for six consecutive half-year periods will be included. Selected companies will be listed on Kind, and relevant indicators will be introduced in brokerage home trading systems (HTS) and mobile trading systems (MTS). PBR is a measure calculated by dividing market capitalization by book value.
The government aims to highlight companies that have been undervalued for an extended period to encourage improvements in profitability, capital efficiency, and shareholder returns.
Companies have the opportunity to avoid being listed. If they submit a PBR improvement plan in a specified format by October 22, they can be exempted from disclosure for one year. According to the exchange, 62 companies submitted plans, including 34 from the KOSPI market and 28 from the KOSDAQ market. However, records show that Hyundai Steel, E-Mart, Lotte Chemical, and Hanwha Life did not submit separate PBR improvement plans by the deadline. It remains uncertain whether these companies will ultimately be included in the list. The initial disclosure will also apply a special provision that excludes companies whose PBR exceeds sector standards as of October 22.
There are no exceptions based on company size or profit levels. A Korea Exchange official confirmed that even large companies generating a certain level of profit could be subject to disclosure, stating, "Yes, if they fall within the bottom 25% of the KOSPI market or the bottom 10% of the KOSDAQ market, they meet the selection criteria." The official added that even in sectors with few companies, at least one will still be classified in the lower tier.
* This article has been translated by AI.
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