Starting from the settlement of accounts in December 2026, it is mandatory to list publicly announced land prices for land owned by companies.

Starting from the settlement of accounts in December 2026, it is mandatory to list publicly announced land prices for land owned by companies.

“There is upside potential equal to the gap between market price and ledger”... Search for ‘hidden land rich’, promising prospects

(Seoul = Yonhap News) Reporter Hwang Cheol-hwan = As the value of land owned by a specific company can be transparently confirmed from this year's end-of-year financial statements, investment in listed companies with 'hidden land wealth' is expected to pick up steam.

According to the financial investment industry on the 5th, the Financial Services Commission finalized the amendment to Korean Financial Reporting Standards (K-IFRS) No. 1016, ‘Tangible Assets,’ containing these contents on the 23rd of last month.

Previously, when there was a significant difference between the book value and fair value of tangible assets using the cost model, it was recommended to disclose the fair value, but there were not many cases of actual disclosure.

For this reason, it has been pointed out that it is not easy to determine changes in the actual value of the assets owned by the company.

The revised standard required the publicly announced land price according to the 'Real Estate Price Disclosure Act' to be disclosed in the annotation for land as a tangible asset to which the cost model is applied. Land for which there is no publicly announced land price under the law and land located overseas are excluded from the target.

This is a big change in that it has been described as acquisition cost until now, making it difficult for general shareholders to determine the actual net asset value.

Soojin Eom, a researcher at Hanwha Investment & Securities, said, "As a result, the potential upside due to the gap between the current market price and book value of assets is revealed to the surface, and changes are expected, such as the activation of shareholder action demanding improvement in corporate value through asset revaluation."

In the case of companies that recorded land and buildings acquired decades ago at the acquisition cost, the actual PBR reflecting the market price is bound to be lower than the price-to-book ratio (PBR) calculated based on book value.

For this reason, some listed companies have been in conflict with minority shareholder groups who insist that their real estate assets be re-evaluated and reflected in their financial statements.

Researcher Eom said, "We may have been able to ignore shareholders' requests for asset re-evaluation until now, but as this regulation has been confirmed to require publicly announced land prices to be compared and disclosed in the notes starting from the fiscal year ending in December 2026, it will be difficult for companies to continue to postpone re-evaluating undervalued assets and reflecting them in their financial statements at realized values."

Types that should be particularly noted include ▲holding large-scale buildings and land for non-commercial purposes ▲holding commercial assets with high versatility and high number of modifications ▲companies that are unlikely to be sold because they are core operating assets, but are highly likely to serve as positive factors during re-evaluation.

Researcher Eom predicted, “Among low PBR asset stocks, we should pay attention to companies that own valuable real estate,” and added, “The three types of stocks above will benefit from this regulatory change.”