Sewon Precision Industry ((KRX:021820), a rare Net-Net opportunity.
I’m interested in “uglystocks” for a simple reason: I’ve lost faith in the current pricing system. I believe its discovery function has been compromised, making it extremely challenging to perform reliable economic calculations and value projections.
I believe buying undervalued stock issues, Ben Graham Net-nets, Walter Schloss cheap TBV, and contrarian international /oversold stocks (selling at their 5- to 10-year lows) is an intriguing proposition because these assets have already shed their “inflationary” Fats, making them leaner, healthier investments with potential for a turnaround. More importantly, the wider investment public and the excessively US-centric pros are rarely privy to such opportunities.
PE Ratio |3.18
P/TBV Ratio |0.21
P/FCF Ratio |4.01
P/OCF Ratio |2.35 The company has 319.44 billion in cash and 3.00 billion in debt, with a net cash position of 316.44 billion or 31,643.72 per share. ( Korean Won)
The stock currently sells at 1/3 of its net cash value!!!!
Sewon Precision Industry makes stamped metal and aluminum parts — body panels, structural components, interior trim — primarily for Hyundai and Kia. The company has returned to profitability after a rough stretch in 2022–2023, carries almost no debt, and sits on an extraordinary cash position.
At ₩14,500 per share, the stock trades at roughly 40% of its Net Current Asset Value. Cash and near-term liquid assets alone exceed the entire market capitalization. The operating business, the U.S. plant expansion, and a long-standing customer relationship with the world’s third-largest automaker group are all priced in at a negative price.
The Net-Net Math
Benjamin Graham defined a net-net as a company trading below its Net Current Asset Value — current assets minus all liabilities. He considered purchasing such stocks at two-thirds of NCAV or below to be the most reliable margin-of-safety strategy available to common stock investors. Sewon trades at roughly 40% of NCAV, well inside even Graham’s most conservative threshold.
Current assets stand at approximately ₩453 billion, including a cash pile of around ₩319 billion. Total liabilities are a modest ₩67–91 billion. That produces an NCAV of roughly ₩362 billion, or ₩36,200 per share — more than double the current price.
Applying Graham’s more conservative Net-Net Working Capital method — discounting receivables to 75 cents on the dollar, inventory to 50 cents, crediting cash at full face value, then deducting all liabilities — yields approximately ₩30,500 per share. The current price represents roughly 48% of even this fire-sale number.
The Business
Sewon is expanding into the United States, positioning plants to serve Hyundai’s new EV assembly complex in Georgia. This gives the company a foothold in North American EV supply chains at a moment when localisation mandates under U.S. industrial policy are creating structural demand for nearshore component manufacturing. Revenue has resumed growth, and trailing net margins approach 23% — unusually strong for a metal-stamping operation.
The stock trades at roughly 3.5x earnings and 0.21x book value. Enterprise value is deeply negative — by more than ₩160 billion — because net cash dwarfs the market cap.
Deep discounts on Korean small-caps often persist due to family control, limited analyst coverage, and a broad governance discount. Sewon has relevant history here — but the litigation that created the cash reserves also settled the governance issue, helping to clarify the situation.
The catalysts are straightforward: a special dividend or buyback, increased institutional attention as the U.S. EV expansion matures, or activist engagement. Even absent a near-term catalyst, the company continues accumulating earnings on top of an already outsized asset base. If the market re-rates toward NCAV over a two-to-three-year horizon, the implied range is ₩36,000–50,000 per share — two to three times the current price, with no guarantee of timing.
Risks
Customer concentration is the primary concern — Hyundai and Kia together represent the majority of revenue, so a meaningful pullback in Korean auto output or a sourcing shift would hit Sewon hard. The stock is thinly traded, making position-sizing discipline essential. Prior related-party transactions warrant continued vigilance on capital allocation decisions, even after the litigation resolution. And auto component businesses are inherently cyclical.
Bottom Line
This is one of the purest net-net situations available in global markets today. Cash alone exceeds the market cap. The business is profitable, expanding, and nearly debt-free. The principal requirement is patience — and a tolerance for the idiosyncratic risks of Korean small-caps. Suitable for long-term value investors; not for traders or anyone uncomfortable with illiquidity.
PS: I do not hold shares in this company, and I write strictly for entertainment and intellectual stimulation. Always contact a trustworthy Investment advisor before purchasing international stocks or any stocks for that matter. I am radically anti-Wall Street but pro-Value Investing. Feel free to contact me if you have any other questions. More ideas down the pipeline.)
XOXO!!
