151 Low-PBR Companies Disclosed; Improvement Plans and Implementation in Focus
The Korea Exchange disclosed companies in the bottom 25% of their KOSPI industry groups by price-to-book ratio (PBR) over the past three years, as well as companies in the bottom 10% of the KOSDAQ. After screening the lower-ranked companies among approximately 779 KOSPI-listed firms and excluding those that had submitted improvement plans, among others, the exchange named 151 companies: 96 on the KOSPI and 55 on the KOSDAQ. The companies’ average PBR was approximately 0.24 times.
PBR compares a company’s market capitalization with its net assets. Net assets are calculated by subtracting liabilities from assets, so a low PBR means the market assigns a low value to a company’s net assets. The companies may be identified as low-PBR firms on HTS and MTS platforms, with the disclosure intended to encourage voluntary improvements.
Financial authorities plan to require companies to submit improvement plans and monitor whether they are implemented. Measures to press companies to change through the stewardship code and the exercise of shareholder rights by pension funds were also raised. The challenge is to continue reviewing disclosures and board decisions, as in cases of undervalued companies in Japan, and assess at the end of next year whether the number of disclosed companies has actually fallen.