East Asia Technology

Pay no attention to that man behind the screen

There is a technology company (let’s call it Company D) in East Asia that has just ridden up to a new plateau in revenue and profitability. The market is pricing this stock as if this profit level will immediately revert to prior years. There are many business reasons why this tailwind, coupled with diversification into other business lines, using the same technological expertise, mean that this is unlikely to occur.

Furthermore, there is another stock (let’s call it Company S, which is one of the most profitable subsidiaries of the holding company), that is trading closer to fair value. Company D is trading at a 60%–70% discount of its stake in Company S. At current market prices, Company D prices are valuing Company S for 35 cents on the dollar and its own business for zero or even negative value. This is a situation where the business fundamentals show that this technology stock is cheap, and sum of the parts shows that the valuation is far too cheap (even after applying a typical holding company discount in this jurisdiction). Let’s take a more detailed look at why this gap exists and how the new regulatory environment is set to close it.

The convergence of the newly launched IBKR Korea platform and the aggressive "Value-Up" regulatory push in Korea, (see mkind.krx.co.kr/eng-valueup), creates a unique window for discovery. This setup provides a rare entry point into what is our favorite stock in the Korean market, where a massive valuation gap is meeting the regulatory catalysts required to close it. By investing ahead of the mandatory H2 2026 "low-PBR" disclosures, we can capitalize on a name that the domestic market is going to force re-evaluation.