12 Healthcare Stocks Including Celltrion Added to K-Value Up Index

The government has selected the ‘Korea Value Up’ Index as part of its efforts to address the Korea Discount, and 12 stocks from the healthcare sector have been included in the index.

On the 24th, the Korea Exchange (KRX) announced the 100 constituent stocks and selection criteria for the Korea Value Up Index. This initiative is part of the government’s Corporate Value Up Program, which aims to enhance corporate value and reduce the Korea Discount. The KRX plans to provide real-time index data to both domestic and international investors starting from the 30th.

The 12 healthcare companies included in the Korea Value Up Index are ▲Celltrion ▲Hanmi Pharmaceutical ▲Chong Kun Dang ▲JW Pharmaceutical ▲Dongkook Pharmaceutical ▲Medytox ▲Classys ▲Caregen ▲Dentium ▲PharmaResearch ▲Seegene and ▲L&C Bio.

The Korea Exchange used a five-step screening process to select the included stocks. First, to ensure market representation, they shortlisted the top 400 companies by market capitalization. Only companies that had not posted a loss for the last two consecutive years or had no cumulative losses over the past two years were considered.

Next, in terms of shareholder returns, companies that had distributed dividends or carried out stock buybacks for two consecutive years were selected. In addition, from a market valuation perspective, they included companies whose average price-to-book ratio (PBR) over the last two years ranked within the top 50% of the entire market or within their specific industry. Finally, in evaluating capital efficiency, the KRX selected 100 stocks from companies that met these criteria and had an industry-leading return on equity (ROE).

The inclusion of these companies in the KRX Value Up Index is expected to draw significant attention from investors. According to the KRX, following listing reviews and the submission of securities registration statements, an Exchange Traded Fund (ETF) based on the Value Up Index is expected to be listed in early November. The KRX has already conducted demand surveys, and 10 major asset management companies have expressed their intention to participate. Furthermore, it is anticipated that institutional investors, including the National Pension Service, will use this index as a key investment benchmark.

A representative from one of the pharmaceutical companies included in the index stated, "Being part of the Value Up Index proves our representativeness in the industry. We will continue to maintain an appropriate PBR and strive to enhance shareholder value to meet market expectations."

In addition to healthcare, the Value Up Index also includes stocks from a wide range of industries: Information Technology (24), Industrials (20), Consumer Discretionary (11), Financials and Real Estate (10), Materials (9), Consumer Staples (8), Communication Services (5), and Energy (1).