We use the Alpha Model, our proprietary system, to assess the attractiveness of a company across a number of factors – profitability, growth, sentiment, valuation, corporate behaviour, capital structure – over the long term. This combination of proven fundamental characteristics is crucial to our investment approach.
Our assessment of the South Korean electronics company using the Alpha Model shows that it is attractively valued for the majority of metrics relative to its peers. The company has a strong balance sheet, positive expected earnings and it has a good and improving QESG score, our proprietary assessment of a company’s ESG characteristics.
As an emerging-market company, it seeks to meet global standards, such as those set out by the Global Reporting Initiative, the Taskforce for Climate-related Financial Disclosures and CDP, thereby helping it lead the way in sustainability in the region. In addition, the company’s exposure to a number of the Sustainable Development Goals (SDGs) alongside its Global Goals app help to promote the SDGs and, at the same time, educate consumers.
Engaging to generate ESG outcomes
Alongside our colleagues at EOS at Federated Hermes, we have successfully engaged the company since 2013 on a myriad of issues including capital allocation, board structure and gender diversity, workers’ safety, product safety and supply chain management for cobalt. Indeed, the group has demonstrated a positive approach toward participating in the circular economy, CO2 emissions and remuneration matters.
For a deep dive into the company's fundamentals and ESG characteristics, read the full case study here.