In a research report published on 25th August, Hana Securities analysed Korea FT (KOSPI: 123410), a specialist automotive-parts manufacturer, and found its shares trading at a price-to-earnings (P/E) ratio of just 3.7 times. With the stock already down 43% from its 52-week high and the company actively buying back its own shares, debate over the depth of its undervaluation is intensifying.

Recent results: solid margins, but uneven

Korea FT reported revenues of 217bn won and operating profit of 14.4bn won for the second quarter of its 2026 fiscal year (April–June), representing year-on-year changes of 7% and 9% respectively. The operating margin came in at 6.6%. The gross margin reached a record quarterly high of 17.1%, though the operating margin slipped 1.2 percentage points. Three factors dragged on profitability: a swing to losses at the company's Chinese subsidiary following reduced output from key customers; construction costs related to the expansion of a domestic research facility; and the deferral of tooling-sale revenues that had been concentrated in the first half of the previous year.

On a first-half cumulative basis, revenues reached 427.6bn won and operating profit 27bn won, up 7% and 1% year-on-year respectively. The first-half operating margin was 6.3%, down 0.6 percentage points from a year earlier.

Product mix: canisters hold up, trim parts surge

By product category, canister revenues rose 2% year-on-year, while filler-neck revenues fell 9%. Trim and interior parts jumped 20%, boosted by the consolidation of PlasCoTech, a subsidiary brought onto Korea FT's books in January of this year. Within the canister segment, volumes destined for conventional internal-combustion-engine vehicles declined, but this was offset by higher average selling prices for hybrid (HEV) and plug-in hybrid (PHEV) variants. First-half sales of canisters for electrified vehicles surged 42% year-on-year, lifting their share of total canister revenues by 7.5 percentage points to 25.9%.

Second-half outlook: a meaningful recovery expected

Hana Securities forecasts second-half revenues of 416bn won and operating profit of 23.1bn won, representing year-on-year increases of 7% and 28% respectively. For the full 2026 fiscal year, the brokerage projects revenues of 843.6bn won, operating profit of 50.1bn won, net profit of 41.8bn won, and earnings per share (EPS) of 1,501 won. The anticipated second-half improvement rests on three pillars: the continued consolidation of PlasCoTech; a smaller drag from one-off pricing adjustments and bonus payments that inflated costs in the fourth quarter of the prior year; and the recognition of tooling-sale revenues deferred from the first half.

Buyback adds another layer of potential upside

Korea FT's ongoing share buyback is also attracting attention. The company launched a 10bn won repurchase programme on 26th May, running through 25th November, targeting 1,678,000 shares — equivalent to 6% of shares in issue. By the end of the second quarter, 353,000 shares had already been purchased. No decision has been made on whether or when to cancel the repurchased shares, but Hana Securities estimates that cancellation would lift EPS by roughly 6% and compress the P/E further, from 3.7 times to 3.4 times.

On the dividend front, if Korea FT maintains its 2025 per-share dividend of 200 won, the prospective yield at the current share price would be 3.6%. The dividend has been on a steady upward trend, rising from 120 won per share in 2023 to 150 won in 2024.

Caveats: limited coverage and real risks

It bears noting that this analysis reflects the view of a single brokerage. Korea FT carries no formal investment rating or target price — it is classified as "Not Rated" — and there is no market consensus against which to benchmark these projections. The report's consensus data fields for 2026 and 2027 — revenues, operating profit, net profit, EPS, and book value per share — are all listed as not available.

Investors should also weigh the downside risks carefully. The Chinese subsidiary has already slipped into the red as local customers cut production, leaving Korea FT's earnings closely tied to the output schedules of global vehicle manufacturers. Europe is a critical market: the Polish subsidiary accounts for roughly 44% of group revenues, making the company meaningfully exposed to any slowdown in European auto demand and to currency fluctuations. Capacity expansion in the United States has been cited as a positive development for long-term demand responsiveness, but the near-term capital costs could weigh on margins.

Historical context: approaching the lower bound of its valuation range

Looking at the longer arc, Korea FT's operating margin has improved consistently, from 1.9% in 2019 to 5.8% in 2025 and 6.1% in the first half of 2026. The P/E multiple has fluctuated — 7.1 times in 2022, falling to 3.3 times in 2023, then 3.5 times in 2024, before rising to 5.2 times in 2025 — suggesting that the current reading of 3.7 times is approaching the low end of its historical range. At 0.5 times book value, the shares trade at a 50% discount to net assets, adding to the valuation appeal for asset-focused investors.

Korea FT's shares closed at 5,530 won on 24th August, 43% below their 52-week high of 9,250 won. The company's market capitalisation stands at approximately 154bn won.