Nepes: Profit Recovery and a Sharp Share Price Rise, With Valuation Multiples Now Elevated

Thesis

The data supports a real earnings recovery. Operating income turned from a ₩70.0B loss in 2023 to a ₩23.8B profit in 2025, and trailing operating income reached ₩37.6B as of H1 2026. Revenue has also grown, from ₩464.3B in 2024 to ₩521.4B in 2025 and ₩548.8B on a trailing basis.

The data does not show that the recovery is secure. Trailing net margin is only 2.2% and net income of ₩12.2B is below 2025's ₩16.6B. The share price has risen 36.6% in three months, so much of the improvement may already be reflected in it. Foreign ownership rose from 10.3% to 13.7% in 60 days and foreigners were net buyers over 20 days, while retail investors were net sellers. No news headlines are available in the data, so the drivers of the move cannot be confirmed from it.

Business overview

Nepes is a semiconductor-sector company listed on KOSDAQ since December 1999 and founded in December 1990. It has 23,059,202 listed shares and a market capitalization of about ₩621.4B. It is led by two co-CEOs, 이병구 and 이창우. Revenue history in the data: ₩418.4B in 2021, ₩588.0B in 2022 (up 40.6%), ₩480.1B in 2023, ₩464.3B in 2024 and ₩521.4B in 2025. The data gives no product or customer breakdown, so we do not describe the business lines. The 52-week range is ₩11,400 to ₩41,150, and the current price is about 34.5% below the high.

Financial analysis

These figures come from filed financial statements. Operating margin improved from -14.6% in 2023 to 0.7% in 2024, 4.6% in 2025 and 6.8% on a trailing basis to H1 2026. Net income was -₩98.5B in 2023 and -₩62.2B in 2024, then ₩16.6B in 2025 and ₩12.2B trailing (net margin 2.2%). Return on equity was 14.2% in 2025 and is 10.3% trailing, after -49.7% and -48.2% in 2023 and 2024.

The balance sheet shows liabilities at 177.8% of equity, cash of ₩108.0B and borrowings of ₩17.9B. Trailing free cash flow is positive but small at ₩5.5B. Net income has been volatile over five years, with losses in three of them.

Valuation

On trailing figures the price-to-earnings ratio is 50.9, price-to-book is 4.9, price-to-sales is 1.1 and EV/EBITDA is 3.6. There is no dividend yield. Year-end P/E was 21.7 in 2025 and 4.7 in 2022, so the current P/E is above its own history shown here. Year-end P/B was 2.9 in 2025, versus 4.9 now.

Among the listed peers, P/E is 5.7 for SK hynix, 13.6 for DB HiTek, 15.9 for Hana Micron and 10.3 for Jeju Semiconductor, all below Nepes. Hana Micron's P/B of 4.9 matches Nepes, and Jeju Semiconductor is at 5.3. DB HiTek is at 2.0 and Fadu at 44.9. The peers are far larger by market cap.

The valuation model, a 5-year discounted cash flow at a 9.8% rate, gives a base estimate of ₩50,161 per share, with a bear case of ₩36,835 and a bull case of ₩69,595. This is a model estimate based on the assumptions shown, not a target. Even the bear case is above the ₩26,950 close, which shows how sensitive the result is to the cash flow assumptions given weak trailing free cash flow.

Catalysts

• Investor relations events were held on 2026-07-07, 2026-09-17 and 2026-10-14, showing regular communication with investors.
• The half-year report filed on 2026-08-14 supplied the latest trailing figures, including a 6.8% operating margin.
• Foreign ownership rose to 13.7% from 10.3% 60 days ago, with ₩11.8B of net foreign buying over 20 days.
• Institutions were net buyers of ₩7.8B over 20 days while retail investors sold ₩19.8B, a shift in who holds the shares.
• The next periodic filing will show whether the margin recovery continues.

Risks

• Trailing P/E of 50.9 leaves little room for earnings to disappoint relative to peers on lower multiples.
• Net margin is only 2.2% and trailing net income is below 2025's, so profit growth is not yet established.
• Liabilities are 177.8% of equity, which is a meaningful leverage level even though borrowings are only ₩17.9B.
• Free cash flow of ₩5.5B is small relative to the ₩621.4B market cap, which makes the cash flow model estimate sensitive to assumptions.
• The price rose 36.6% in three months and could be volatile, as shown by the 52-week range of ₩11,400 to ₩41,150.

Closing view

The filings show a clear turnaround from heavy losses to positive operating profit, and the share price and foreign ownership have moved up with it. Against that, current earnings multiples are well above peers and the company's own year-end history, net margins are thin, and cash flow is modest. The model estimate sits above the market price, but it depends on assumptions that the weak trailing cash flow cannot confirm. The evidence is mixed: improving fundamentals on one side, a demanding valuation and a short record of profitability on the other.

Model estimate of fair value

Bear

₩36,835

+49%

Base

₩50,161

+102%

Bull

₩69,595

+181%

Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal.

Base case of the 5-year discounted cash flow model on the stock's Valuation tab (statements TTM to H1 2026; discount rate 9.8%). Bear and Bull move the main assumptions by fixed steps. See and change the assumptions

Filings and data used

• Investor relations (IR) eventOct 14, 2026
• 5%+ holding reportSep 30, 2026
• Investor relations (IR) eventSep 17, 2026
• Half-year report (Jun 2026)Aug 14, 2026
• Investor relations (IR) eventJul 7, 2026
• 5%+ holding reportJun 30, 2026
• Insider shareholding reportJun 15, 2026
• Insider shareholding reportJun 8, 2026
• Quarterly report (Mar 2026)May 15, 2026
• 5%+ holding reportApr 8, 2026
• Insider shareholding reportApr 8, 2026
• Change of Head Office LocationMar 26, 2026
• Daily prices up to 2026-10-16
• Financial statements, trailing 12 months as of H1 2026
• Our fair value model, statements as of TTM to H1 2026

Report history

1. Oct 19, 2026InitiationStart of coverage (reader request)Nepes: Profit Recovery and a Sharp Share Price Rise, With Valuation Multiples Now Elevated