Korean stocks are on the menu baby! Since May this year you can buy them on Interactive Brokers, even the painfully illiquid ones. Honestly surprising how cheap they are. Capital allocation is pretty atrocious, but I think that is the game here, as you want to pick the ones that have given indications that will change. I have found 2 Korean stocks I have been buying already, although they are both somewhat illiquid. Both are basically dirt cheap net nets that have given indications of increased capital returns.
I think with Korean stocks the trick is to find ones with very old or recently deceased large holders since inheritance taxes are 50-60% in South Korea. So as the Grim Reaper starts circling the wagon they have a strong incentive to keep the share price down. But after they pass away their descendants should have an incentive to boost share price or pay large one off dividends to pay their inheritance taxes.
HOWEVER this pattern did not at all play out at one of the first stocks I looked at: THN Corporation (A019180). Insider ownership looks like this:
Lee Gwang-yeon - 64 - 20.88%
Chae Seung-hoon - 58 - 16.04%
Chae Won-jun - 33 - 0.24%
Chae Cheol - 83 (deceased) - 0.00% currently; 20.48% before inheritance
They make wire harnesses for Hyundai with some very heavy customer concentration, 63% Hyundai Motor, 20% Hyundai Mobis and most of the remainder is Kia. Still it seems 1.4x earnings with a net cash position seems to be too cheap? Yet dividend pay out sits barely above 10% and Chae Sung-hoon who owned 20% has been selling a sizable amount of shares to pay for inheritance taxes without really making a serious effort to boost the valuation above 1.4x earnings. I’d say given the customer concentration, consistent revenue growth and somewhat elevated margins, 4x earnings is fair?
Growth and margin expansion has also been fairly healthy as these wire harnesses get more complex over time (do note market cap is under 100 billion Won and co has a modest net cash position):
But passing on this for now as I cannot figure out why insiders would think it is reasonable to sell shares here at ~2x earning. With a dividend payout ratio of around 3% (not yield, but payout ratio!). Even assuming somewhat lower sales with a 5% margin the stock would still trade at only 3x earnings here.
Here is the timeline
The old man died on 11th of December.
Chae proposed selling 1.44m shares which is close to his tax liability (or about 8% of shares outstanding)
Lee has his entire 20% stake pledged to tax office from previous inheritance taxes
This did not go unnoticed by Korean investors, here a Korean article about incentive for higher dividends
Yet no higher payout ratio announced in March 2026
A possible explanation is that the two 20% blocks were owned by heirs of 2 different founding families and that a possible power struggle could explain lack of support for increased dividends? In the above article this is explicitly denied, but who knows.
Don’t own any shares, but maybe I should, as Chae did cancel the last sale of 423k shares citing the need for share price stability and minority shareholder protection. So that could be a tell there will be a higher dividend soon? A 30% payout on 2025 earnings would mean a 21% dividend yield here. However this stock has never traded above 3-4x earnings and basically seems to be a short on copper (which given tight supply and enormous demand does not seem like a bet I want to make).
There are 2 Korean stocks I did buy however, and got into 2 new HK stocks (both already covered previously on this blog).