Deep-dives

FnGuide (064850 KS)

The FactSet/MSCI of South Korea at 12.9x P/E

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When I interviewed Raghav Kapoor the other day, he mentioned a small Korean financial information provider called FnGuide (064850 KS — US$64 million).

I wanted to dig deeper. FnGuide is a tiny company in terms of market cap, but significant in terms of its impact on Korea's financial services industry. You see FnGuide's name mentioned almost every day in the business media and in sell-side research as a source of financial and economic data.

FnGuide owns the Excel-based financial data tools DataGuide and Quantiwise. It also has several equity research aggregation platforms such as FnGuide.com, WiseReport and Retamin.

Now, it's true that international alternatives such as Bloomberg and FactSet also provide corporate and economic data to investors. However, these platforms are expensive and not tailored to Korean-language disclosures and K-IFRS. In practice, most institutional investors seem to use Bloomberg for international stock data and FnGuide for local data.

In addition to financial data, FnGuide also has a fast-growing index business. That industry is dominated by Korea Exchange (KRX), which controls the benchmark index KOSPI. FnGuide's index business is smaller, but it dominates the market for thematic ETFs, which have become popular in recent years. In fact, the total value of ETFs tracking FnGuide's indices has doubled in less than a year. And Korea's ETF penetration remains far below that of the United States, suggesting continued upside in the coming years.

The stock has gone nowhere in the past four years. If you look at the share price, you'll also notice a recent spike:

This spike is due to a fight for control over the company. FnGuide was initially spun out of Samsung Securities in 2000 by Kim Gun-ho. But after a few years, FnGuide encountered financial difficulties and was bailed out by industrial conglomerate Hwacheon Machine Tool. In 2023, Hwacheon ousted Kim, seemingly frustrated with FnGuide's slow growth and low return on equity. Investors speculated that both sides would eventually accumulate shares to gain control of the company.

In the end, Hwacheon emerged as the winner, now controlling 47% of FnGuide. While having a machine tool company as a controlling shareholder of a financial information provider might seem odd, I think Hwacheon has minority interests at heart.

For example, look at FnGuide's early 2024 Value-Up plan. FnGuide was one of the first companies in Korea to publish such a plan. The new plan targets an 18% return on equity. Hwacheon also wants FnGuide to get out of financial speculation and instead divest of non-core assets.

Since then, we've seen significant progress in terms of FnGuide's governance.

The company has now begun communicating with foreign investors. The foreign ownership rate has gone from almost zero to 16%.
FnGuide has instituted its first dividend, and the payout ratio is likely to increase further.
6% of shares outstanding have been cancelled.
FnGuide is planning to sell its valuable headquarters in Magok Industrial District in Seoul, worth 30% of the market cap.
And finally, FnGuide is also planning to separate the CEO and Chairman roles – another step towards better corporate governance.

In March 2025, Hwacheon hired Lee Gi-tae as its new CEO. He's a seasoned Samsung Securities professional who previously headed up that company's research, pension, and wholesale divisions. Since Lee comes from a sales background, FnGuide will likely become more aggressive in creating and selling new products, including indices and data products. One current initiative is to leverage FnGuide's AI research team to develop new products. So I think the organization is finally moving in the right direction.

FnGuide's earnings per share has risen significantly, reaching KRW 226 in the third quarter of 2025, while its share price now stands at KRW 8,650. Part of that improvement is partly due to the popularity of FnGuide's shipbuilding and defense indices. But I also think there's a longer-term growth story here. On my relatively conservative numbers, I see the stock trading at a run rate of 10x EV/EBIT, or about 13x P/E. Global peers tend to trade closer to 20x.

The key near-term risk is that ETFs using FnGuide's benchmark indices experience outflows, leading to a drop in aggregate AUM. Korean defense and shipbuilding stocks look toppy to me. On the other hand, ETFs tracking these sectors account for only a small portion of total AUM. And FnGuide's share price hasn't really responded to the company's success in its index division, perhaps due to persistent selling by former CEO Kim Gun-ho.

Another risk is that the Kwon family, which controls Hwacheon, now completely dominates the board. There's a risk that decisions will be taken at the expense of minorities. On the other hand, the more research I've done, the more positive I've become about Hwacheon's longer-term intentions. FnGuide has finally found religion when it comes to capital allocation, and that bodes well for the future.