Mirae Asset Securities' Korean Stock Picks (June 2023)
June Korean stock picks: Duksan Neolux, LX International, SK Innovation, SK Hynix, Lotte Data Communication, Samsung SDS, Hyundai AutoEver, SK Biopharmaceuticals, KakaoBank, SKC & HanAll Biopharma.
Mirae Asset Securities (KRX: 006800 / 520003 / 00680K) is the largest investment banking and stock brokerage company by market capitalization in South Korea. They come out with (and post on their website) a steady stream of free research pieces - namely about Korean stock picks.
Stocks covered by their research during the month of June and (in the order they covered them from the most recent to the earliest in the month) in this post include:
Duksan Neolux; LX International; SK Innovation; SK Hynix; Lotte Data Communication; Samsung SDS; Hyundai AutoEver; SK Biopharmaceuticals; KakaoBank; SKC; & HanAll Biopharma
Usually they cover more stocks during a month…
Next Tuesday’s post will cover a podcast interview with a value fund manager who explained how Korea (along with Taiwan) is one of their biggest hunting grounds for value stocks right now. However, it was also noted how Korea has long been a value trap as Korean companies have been “incredibly poor guardians of the cash flows they generate… misallocating it…” This is slowly changing, but there is still a big discount on Korean stocks.
In addition and just last month, MSCI again classified South Korea as an emerging market when it released its latest market access assessment for major countries. Of the 18 categories in which MSCI assesses the Korean stock market, six remained the same as last year:
Level of foreign exchange market liberalization
Investor registration and account opening
Information flow
Clearing and settlement
Transferability
Availability of investment products.
According to this recent (and long winded…….) podcast, adding Korea to the developed market index would hurt mid and small cap Korean stocks (as foreign fund managers would need to sell them) and help a few large cap Korean stocks (aka Samsung, etc.). It was also mentioned that the Israeli stock market has continued to struggle to attract foreign investors and retain local listings after their 2010 upgrade from emerging to developed market status.
In addition, different Korean security firms have different predictions for which Korean stocks will be added or removed from the MSCI Korea Index when they conduct their regular index rebalancing next month:
EcoPro, Hanwha Ocean, JYP among top MSCI inclusion candidates (The Korea Economic Daily) July 2023
CJ, Netmarble, Emart, Lotte Energy Materials, Kakao Games and Pan Ocean face an exit
Getting back to Mirae Asset Securities, they publish their Korean stock pick research in English. Note that when I click on their website, I receive NO pop-up asking what sort of investor I am or my location; but there is this disclaimer at the end of each of the research report PDF files:
This post will NOT be quoting directly from the website or research documents themselves (beyond giving the title of the report).
Keeping their disclaimers in mind, you might want to open the Research Report section of their website and select Company Analysis on your phone or in another tab or browser to look over the short titles of their research pieces (summarizing their thoughts and linked to a couple paragraph summaries on their website) and their advice about the stock picks.
However, their summaries and the more detailed research contained in the PDF files do NOT include good long term technical charts, descriptions of what the company does or links to the stock pick’s IR page, current quote, or most recent statistics - all pet peeves of mine when not made available.
To make your life easier, this post includes:
A heading with the stock name.
A quick description of the stock pick with links to the IR page and stock quote(s) on Yahoo! Finance.
A link to any Wikipedia page (for what it might be worth…)
The title of the report linked to the short summary brief on the Mirae Asset Securities website.
The link to the Mirae Asset Securities research report PDF file about the stock pick.
Forward or trailing P/E and dividend yields linked back to the Yahoo! Finance statistics page.
The latest long term technical chart linked back to Yahoo! Finance.
And as always, this post is provided for informational purposes only (and again, to make your life easier…). It does not constitute investment advice and/or a recommendation…
Keep in mind that Mirae Asset Securities would more or less be doing sell side research (with all the usual conflicts of interest that can arise from doing that) and you probably will never or rarely see a sell recommendation from them - just like you almost never see a sell recommendation coming from Wall Street…
But their equity research comes with good stock financials and it’s in English (as again, many Korean stocks still do not have IR pages or financial reports in English albeit most of the stocks in this post seem to) - meaning its a good starting point for anyone interested in investing directly in Korean stocks.
Duksan Neolux
Duksan Neolux (KOSDAQ: 213420), a core subsidiary of DUKSAN group, develops and manufactures OLED materials for the display industry.
Duksan Neolux (213420 KQ/Buy) Earnings and momentum are improving
Forward P/E: N/A / Forward Annual Dividend Yield: N/A (Yahoo! Finance)
LX International
LX International (KRX: 001120) is a global trading company that provide a full suite of services across the entire value chain ranging from trading to business development, investment to financing & raw material supply to logistics.
The Company is involved in the development, investment, operation, and trading business of coal mines in Indonesia, China, Australia, etc.; operation of oil palm plantations in Indonesia; and agro and food trading business. It also invests in, develops, and constructs power plants comprising hydro, thermal, cogeneration, as well as petrochemical plants in China, Vietnam, India, and Poland; and develops and invests in oil and gas plant projects in the Middle East, Southeast Asia, and Kazakhstan. In addition, the company trades in synthetic resins; supplies petrochemical products, such as ethanol, MTBE, coolants, and organic/non-organic chemicals; and promotes the plastic recycling business. Further, it produces and supplies steel products for home appliances and vehicles, as well as explores for nonferrous metal related new businesses, such as lithium, a core material of the secondary battery. Additionally, the company provides vendor management inventory service embracing procurement, customs clearance, warehousing, and transportation based on its business network and logistics infrastructure; and develops ICT-based next generation business.
Trailing P/E: 2.56 (no forward P/E) / Forward Annual Dividend Yield: 8.45% (Yahoo! Finance)
SK Innovation
SK Innovation (KRX: 096770) is an intermediate holding company of SK Group (second largest South Korean chaebol behind Samsung Group) involved in petroleum, alternative energy, and oil exploration via eight major subsidiaries.
Note that SK On is a leading electric vehicle (EV) battery manufacturer. See: SK Innovation (KRX: 096770): Raises More Funds and is Making Georgia Battery Plant Productivity Gains
SK Innovation (096770 KS/Buy) Comment on rights issue: Final stage of growing pains
Forward P/E: 10.02 / Forward Annual Dividend Yield: N/A (Yahoo! Finance)
