Beyond Memory: AVI’s Korea Opportunity

Korean equities still offer substantial bottom-up value beyond the memory-led KOSPI rally, and improving political and regulatory conditions make activist engagement increasingly capable of unlocking it.

• The KOSPI reached a new all-time high above 8,000 in 2026 and returned 29% in May, but Samsung Electronics and SK Hynix represented about 53% of the index; excluding them, the market gained only 5% in May.
• The memory cycle has produced extraordinary earnings revisions: Samsung’s 2026 consensus EBIT estimate rose from $72bn and 137% year-on-year growth at the start of 2026 to $230bn and about 700%, while Goldman Sachs raised aggregate KOSPI earnings growth expectations from 48% to 277%.
• AVI screened 2,300 non-financial listed companies and identified an investable universe of more than 600 names averaging 0.65x book value and 130% asset backing to market capitalisation; 82% remain uncovered, while the top 100 by quality metrics show 17% EBIT margins, 14% three-year EBIT CAGR and 12% returns on capital.
• This opportunity has been left behind by the index: AVI’s universe returned a median -7% year to date versus +118% for the KOSPI, even though its portfolio companies have expected average three-year revenue and EBIT growth of 9% and 17%, average operating margins of 23% and trailing ROE of 21%.
• AVI’s Korean holdings returned 46% on average since investment began in June 2025 and contributed about 6% to AGT’s NAV, but AI and memory-linked names generated 108% of that contribution; the portfolio’s weighted average discount remained 55.3%, and AVI visited Korea for the fifth time to meet management teams and domestic activists.

Takeaway: Investors should look beyond Samsung Electronics and SK Hynix toward smaller, under-researched companies with excess capital, asset backing and governance discounts, while recognising that the memory super-cycle remains cyclical and Chinese DRAM and NAND capacity is a growing risk; AVI expects political alignment, stronger shareholder protections and forthcoming reforms to support activist-led re-rating.