[Click eStock] "Three Implications of the Korea Value-Up Index... Supply and Demand Expectations for Hanjin Kal, etc."

On the 25th, Kiwoom Securities pointed out three key implications regarding the Korea Exchange's announcement of the 'Korea Value-Up Index.' It predicted that if pension funds choose the Korea Value-Up Index as their benchmark (BM) in the future, Hanjin Kal would benefit in the KOSPI market, while Park Systems would have an advantage in the KOSDAQ market.

The Korea Exchange announced the components and selection criteria of the 'Korea Value-Up Index' the previous day. The Value-Up Index is scheduled to launch as a real-time index starting from the 30th. Subsequently, in early November, index futures based on the Value-Up assets and exchange-traded funds (ETFs) from asset management companies will also be listed.

Researcher Lee Seong-hoon mentioned the characteristics and implications of the index, stating, "Firstly, instead of shareholder return indicators, the index adopts price-to-book ratio (PBR) and return on equity (ROE) as core indicators, which focuses more on 'excellent' companies rather than 'enhancing' corporate value."

Lee explained, "Looking at the detailed methodology, PBR represents market evaluation, and ROE represents capital efficiency, with more emphasis placed on these. It appears that the index benchmarks significantly against Japan's JPX Prime 150 Index, which is composed of companies with excellent corporate value."

Secondly, he highlighted the introduction of relative evaluation within industry groups when applying PBR and ROE requirements. This is analyzed as an intention to encourage corporate value enhancement through peer pressure.

Lee said, "While Japan's JPX Prime 150 Index adopts a dual standard of capital efficiency and market evaluation indicators, Korea's Value-Up Index differentiates itself by introducing relative evaluation within industry groups. It is judged that the selected stocks are intended to represent their industries and to create peer pressure on companies within the same industry that were not included."

Thirdly, attention was drawn to the relaxation of inclusion criteria for companies disclosing Value-Up plans. This special condition aims to increase the currently low participation rate of less than 1% in Value-Up disclosures.

Researcher Lee Seong-hoon added, "Another distinctive feature is that the inclusion criteria for the Value-Up Index heavily consider whether a company has disclosed a Value-Up plan. Considering the plan to compose the index centered on companies that fulfill disclosure in the mid to long term, the necessity to focus on 'disclosure' from a Value-Up investment perspective has increased."

He also predicted that if pension funds use the Value-Up Index as a benchmark in the future, favorable demand conditions will continue for related included stocks. Considering the expected inflow intensity relative to the average daily trading volume over the past 20 days, the strongest inflows in the KOSPI market are expected in the following order: ▲Hanjin Kal ▲S-1 ▲Hyundai Elevator ▲TKG Huchems ▲Dongseo ▲HMM ▲NICE Information Service ▲Ottogi ▲FILA Holdings ▲Cuckoo Homesys.

In the KOSDAQ market, the expected demand inflow intensity is highest in the following order: ▲Park Systems ▲Soulbrain ▲L&C Bio ▲SFA ▲Caregen ▲Megastudy Education ▲Dongkook Pharmaceutical ▲Kolmar BNH ▲Nextin ▲Doosan Testna.