JUSUNG ENGINEERING Ltd. and two other KRX stocks are expected to trade below their fair value

Over the past week, the South Korean stock market remained stable, posting a modest 6.0% year-on-year gain, with earnings expected to grow 30% annually. In this environment, undervalued stocks like JUSUNG ENGINEERING Ltd could represent an attractive opportunity for investors looking to capitalize on potential discrepancies between market price and intrinsic value.

The 10 most undervalued stocks in South Korea based on cash flows

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Overview: JUSUNG ENGINEERING Ltd, a South Korean company, is engaged in the manufacture and sale of semiconductor, display, solar and lighting equipment worldwide with a market capitalization of approximately ₩1.77 trillion.

Operations: The company has a turnover of Rs 272.61 billion from its semiconductor equipment and services business.

Estimated discount to fair value: 31%

JUSUNG ENGINEERING Ltd. currently trades at ₩37,800, below its estimated fair value of ₩53.85 billion, suggesting significant undervaluation based on a discounted cash flow analysis. Despite a decline in profit margins from 23% to 14.6% over the past year, the company is poised for robust growth. Earnings are expected to grow at an annual rate of 37.7% and revenues at an annual rate of 24.1% – both rates well above the market average. However, it is important to note that large one-off items have impacted recent financial results, potentially distorting the quality of earnings.

Overview: Global Standard Technology, Limited operates in the environmental and energy sectors both domestically and internationally in South Korea and has a market capitalization of approximately ₩350.08 billion.

Operations: The company’s total revenue from semiconductor manufacturing is approximately ₩286.34 billion.

Estimated discount to fair value: 40.2%

Global Standard Technology trades at ₩20,000, below its fair value of ₩32.28 billion – a significant undervaluation. The company’s revenue and profit are expected to grow 17.5% and 29.7% annually, respectively, outperforming the South Korean market’s forecasts. Despite this promising growth trajectory and competitive pricing relative to peers, the company’s share price has been very volatile recently. In addition, a recent 2:1 stock split is expected to increase stock liquidity, but follows a period of unstable dividends and slight revenue declines in the first quarter of 2024.

Overview: ADTechnology Co., Ltd., based in South Korea, specializes in the design and development of semiconductor devices and has a market capitalization of approximately ₩351.85 billion.

Operations: The company generates its revenue primarily through the design and development of semiconductor devices.

Estimated discount to fair value: 9.9%

ADTechnologyLtd is trading at ₩25,700, 13.8% below its calculated fair value of ₩29,809.53, which represents a moderate undervaluation. The company’s revenue growth is impressive at 37.4% annually, well above the South Korean market average of 10.7%. ADTechnologyLtd is expected to be profitable within three years and shows promising financial trends with a forecasted very large annual increase in earnings. However, there is insufficient data to evaluate future return on equity against benchmarks.

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This Simply Wall St article is of a general nature. We provide commentary based solely on historical data and analyst forecasts, using an unbiased methodology. Our articles are not intended as financial advice. They do not constitute a recommendation to buy or sell stocks, and do not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.

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