South Korean Industrial Stocks Gaining From Chinese Carmakers Moving Production Closer to Buyers

Chinese auto groups are turning to South Korea as a production hub to get closer to US and European buyers, and that shift is pulling South Korean industrial and manufacturing stocks into the spotlight. New factories, EV partnerships and supply chain realignments could reshape where capital flows next. This article looks at three South Korean stocks exposed to this news and how each might fit, or might not fit, into your watchlist.

The three stocks below are a starting sample. The full screen surfaced 15 more South Korean industrial and manufacturing companies with equally compelling narratives that are not covered in this article. To identify and analyze the highest conviction ideas from this broader group, head straight into the South Korean Industrial and Manufacturing Stocks screener.

SK Square (KOSE:A402340)

SK Square is an investment holding company focused on semiconductors and information and communication technologies across South Korea, China, Asia, the US and Europe. The business is heavily skewed to mobility and commerce, which generate about ₩551,826 million and ₩416,881 million respectively, with additional contributions from platform operations at ₩366,164 million. SK Square has a market cap of roughly ₩123.7 trillion, placing it among the larger listed companies in South Korea.

Investors looking at South Korea as an EV and tech hub may find SK Square difficult to ignore. The company is tied into advanced EV battery and component activity as Chinese automakers ramp local production, and its recent earnings profile combines very high net margins with a low P/E multiple compared with industry averages. At the same time, forecasts of revenue declines, reliance on external borrowing and a relatively new management team introduce uncertainty around how sustainable those earnings are. Investors who want exposure to this EV and semiconductor story and also care about valuation and governance may find that SK Square merits closer analysis.

SK Square’s mix of very high net margins and a low P/E multiple hints that the market may be missing an important part of this EV and semiconductor story. For a detailed view, see the analysis report for SK Square

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LS ELECTRIC (KOSE:A010120)

LS ELECTRIC is a South Korean energy and automation solutions provider that supplies power management, grid control, EV charging and factory automation systems to utilities, manufacturers and transport operators. The business is primarily driven by its Power Sector, which generates about ₩5,516,206 million, with smaller contributions from the Metal Sector at ₩668,130 million, the Automation Division at ₩549,078 million and the IT Sector at ₩143,825 million, partly offset by consolidation adjustments. LS ELECTRIC has a market cap of roughly ₩29,887.2b, which places it firmly in South Korea’s large cap bracket.

LS ELECTRIC sits at the crossroads of power infrastructure, automation and the EV supply chain, so the push by Chinese automakers to build vehicles in South Korea immediately puts it on the radar. Earnings growth has been strong in recent years and forecasts point to revenue and profit growth that outpaces the broader Korean market, supported by high earnings quality and improving margins. The trade off is a rich P/E multiple, reliance on external borrowing and share price volatility, which raise the bar for execution. If you want exposure to electrification and industrial spending tied to these new production partnerships, LS ELECTRIC is a story worth unpacking in more detail.

LS ELECTRIC’s earnings momentum and rich P/E suggest investors might be missing what is really driving this story. Get the full picture in the analyst forecasts for LS ELECTRIC and see what could change if forecasts shift abruptly.

Doosan (KOSE:A000150)

Doosan is a diversified industrial group that spans power generation equipment, construction machinery, fuel cells, electro materials and digital services across South Korea and overseas. Most revenue comes from Doosan Bobcat at about ₩8.9 trillion and Doosan Energy at about ₩8.4 trillion, with additional billions from Electronic BG and over ₩1.1 trillion from Other operations. The group also includes Doosan Fuel Cell and Digital Innovation BU, and the stock carries a market cap of roughly ₩18.1 trillion, putting it firmly in South Korea’s large cap bracket.

Investors watching the EV and advanced components story may want to keep Doosan on their radar. The company is connected to auto related and industrial equipment demand, reports that earnings are now positive, and analysts currently forecast strong future earnings growth with a high projected ROE and a DCF value that sits above the current share price. At the same time, the business relies entirely on external borrowing for funding and the share price has been volatile. That combination of improving profitability, valuation support and funding risk may warrant a deeper look for investors seeking exposure to this manufacturing upswing.

Doosan’s improving profitability and DCF support suggest that the current share price might not tell the full story. Learn more about the factors behind this outlook inside the analyst forecasts for Doosan

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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