Daishin Securities initiated coverage of the holding-company sector on the 15th with an Overweight investment recommendation, naming CJ (target price: 260,000 won) as its top pick and SK (target price: 390,000 won) as its second preference.

Analyst Lee Kyung-yeon argued that three regulatory catalysts will drive a structural narrowing of the discount to NAV (net asset value) at which Korean holding companies trade: stricter guidelines on dual listings, pressure for price-to-book ratio (PBR) reform, and proposed amendments to inheritance and gift-tax legislation.

CJ

Tightened dual-listing regulations have effectively blocked an IPO of CJ OliveYoung, CJ's key unlisted subsidiary, meaning that the growth value of OliveYoung is now far more likely to accrue directly to the holding company. "CJ's effective stake in OliveYoung on a voting-rights basis has risen from 51.2% to 66.1%," Lee noted, adding that an as-yet-unannounced value-enhancement measure represents a further latent catalyst.

SK

Despite SK Hynix carrying a market value of 636 trillion won — value that flows up through SK Square to the holding company — SK's own market capitalisation stands at a mere 23 trillion won. The analyst identified a resolution to cancel the entirety of SK's 24.8% treasury-share holding as the single most powerful catalyst for shareholder returns.

Regulatory Tailwinds

Lee highlighted two legislative developments as potent drivers of a broader holding-company rally. First, a proposed amendment to the inheritance and gift-tax law incorporating a 0.8× PBR rule would eliminate the tax-saving incentive for controlling shareholders to suppress their own share prices. Second, a proposed amendment to the Capital Markets Act would make it mandatory for companies trading below 1× PBR to submit a corporate value-enhancement plan — providing additional structural impetus for re-rating.

Upside to Target Prices

The table below summarises the potential upside from current prices to Daishin's target prices across the seven holding companies under coverage.

Company | Upside to Target Price

Hyosung | 30.3%

CJ | 28.4%

LG | 26.1%

Doosan | 22.9%

HD Hyundai | 21.5%

SK | 19.3%

Hanwha | 14.2%