Namwoo Lee "If Companies Play Their Role in Value-Up, 100,000 Won for Samsung Electronics and 500,000 Won for Hyundai Motor Are Possible"

Korea Corporate Governance Forum, New Year's Press Conference on the 5th
Open Letter to Financial Services Commission Chairman and Exchange CEO
Proper Shareholder Returns Could Make '130,000 Electronics' Possible

A claim has emerged that if the government properly operates the 'Corporate Value-Up Program' prepared to resolve the Korea Discount (undervaluation of the Korean stock market), the stock prices of leading domestic listed companies such as Samsung Electronics and Hyundai Motor could rise by up to 120%.

Namwoo Lee, Chairman of the Korea Corporate Governance Forum, is revealing a letter addressed to the Financial Services Commission Chairman and the new Korea Exchange Chairman at the 'Korea Corporate Governance Forum New Year Press Conference' held on the 5th at Two IFC, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

On the 5th, at a press conference held at IFC Mall in Yeouido, Seoul, Namwoo Lee, chairman of the Korea Corporate Governance Forum, said, "If the boards of directors of Korea's representative listed companies such as Hyundai Motor, Samsung Electronics, LG Chem, and KB Financial eliminate inefficiencies in the balance sheet and properly return profits to shareholders, the fundamental value per share could increase by 50 to 120%," adding, "The improvement could be greater than that of Japan."

He evaluated that despite Hyundai Motor's recent sharp rise in stock price, it is still among the undervalued global automobile companies. In the case of Hyundai Motor preferred shares, the price-to-book ratio (PBR) and price-to-earnings ratio (PER) are only 0.4 times and 3 times, respectively. He said, "The low valuation of Hyundai Motor means that the cost of capital is very high," and suggested, "If the board of directors takes the lead in identifying and disposing of non-earning assets on the balance sheet and uses cash for shareholders, it will gain market trust and the valuation can be fully leveled up."

Chairman Lee emphasized that the Corporate Value-Up Program promoted by the Financial Services Commission is very important for resolving the Korea Discount. He said, "Resistance from some companies is expected, but the financial authorities must proceed unwaveringly," and added, "Listed companies that have entrenched stock price discounts must reflect on themselves and solve the problem."

He also argued that to enhance corporate value, leading listed companies should first repurchase all preferred shares and then cancel them to return value to shareholders and reduce the overall cost of capital.

Specifically, for Samsung Electronics to improve valuation, he recommended measures such as △using 50 trillion won out of 92 trillion won in cash to repurchase all preferred shares as treasury stock and immediately canceling 20 trillion won worth △listing the remaining 30 trillion won worth of preferred shares in the U.S. as American Depositary Receipts (ADR) △promising to return 30-50% of future net profits to shareholders △restructuring the board of directors with experts. Through these measures, Samsung Electronics’ PBR could rise from 1.4 times to 2.2 times, with the stock price potentially increasing to over 130,000 won.

For Hyundai Motor’s value-up improvements, he proposed △using 8 trillion won out of 19 trillion won in cash to strategically repurchase and cancel preferred shares △pursuing third-party sales of the Samsung-dong site △selling 21% of Hyundai Construction shares and 5% of KT shares △promising to return 30-50% of future net profits to shareholders. If implemented, Hyundai Motor’s PBR is expected to rise from 0.6 times to 1.0 times, and the stock price could increase to 500,000 won.

Result of Listed Companies’ Obsession with Income Statement Performance... Ultimately, the Victims of Korea Discount Are the People

Chairman Lee viewed the Korea Discount as a result of listed companies focusing only on operations and neglecting capital efficiency and shareholder returns. He pointed out, "Domestic listed companies have been obsessed with income statement performance and have long neglected the balance sheet," citing examples such as excessive cash holdings, non-earning real estate investments, and cross-shareholding of treasury stocks with other listed companies.

He also said that the victims of this Korea Discount are young people who pay 40% of their lifetime income in taxes. He pointed out, "Over the past three years, the Korean stock market has delivered an annual loss of 2% based on total shareholder return," and added, "The direct victims of the Korea Discount are the citizens struggling with insufficient retirement funds and the National Pension Fund they contribute to monthly."

Regarding the inheritance tax relief recently mentioned by President Yoon Suk-yeol as a measure to resolve the Korea Discount, he said, "It is not too late to reduce punitive inheritance and gift taxes after listed companies start resolving the stock price discount," and added, "While inheritance tax is one of the causes of the Korea Discount, it is not the main cause."

Finally, concerning the implementation of the Corporate Value-Up Program, he suggested, "Like in Japan, a separate independent report is necessary, and it should be clearly stated that the driving force behind the value-up drive is the board of directors, not the management," emphasizing that the report should list the names of all directors to highlight responsibility and duty.

He also recommended that listed companies regularly disclose progress after announcing plans, and that authorities should promote the program for at least three years. Furthermore, the authorities should regularly update the risks of implementation and non-implementation, establish an independent committee, and publicly share successful cases of listed companies faithfully implementing the program.

This content was produced with the assistance of AI translation services.