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HQ Seongnam · South Korea Listing KOSDAQ:236200 Reporting KRW Structure operating company (not holdco 094840) Damodaran FCFF · 1000-iter MC Corrections cash-in-bridge + governance-in-flows FCFF · Dark v3

EMEA #1 biometric exporter, net-cash, with a first-ever 2026 capital-return regime · +44% margin of safety

BUY — conditional on the 2026 capital-return regime proving durable

Suprema is the EMEA #1 biometric access-control specialist (#7–8 global, 140+ countries, ~85% export), asset-light, net-cash, low-teens ROIC, transitioning from fingerprint hardware into a face-AI + software platform. The 2026 regime change — first-ever dividend (≥₩400/sh), a ₩12B buyback earmarked for cancellation, and a numeric Value-Up plan — passes both Korea-methodology viability conditions, so it is not a value trap. After haircutting the cash ~20% in the bridge (slow controlled-opco release, not an end-discount) and normalising the FY2025 peak margin down, fair value is ₩90,276 post a 10% governance residual vs a ₩50,800 price (+44% margin of safety, +78% to price). The Monte-Carlo 5th percentile (₩74,921) still clears the price by ~47%, and not one of 1,000 draws lands below it.

StructureOperating company (not the holdco 094840)Balance sheetNet-cash · ~₩2.4B debt · ~₩125B cash hoardCash returnFirst dividend ≥₩400/sh · ₩12B buyback-and-cancel (2026)β / WACCβ_lev 1.199 · WACC 9.70%GovernanceIn-flows + 10% residual · passes both viability testsVerdictBUY · +44% MoS · conditional on regime durability

Intrinsic / share

₩90,275.86

post 10% gov · pre ₩100306.52

Market / share

₩50,800.00

2026-06-01 close · KOSDAQ:236200 · cash-in-bridge + governance-in-flows

Margin of safety

+77.7%

vs intrinsic

Enterprise value

₩601.23B

63.0% terminal

Cost of equity / debt

9.74% / 3.20%

β 1.20 · CRP 0.81%

Terminal ROIC / g

13.00% / 3.00%

spread ~330bp (ROIC 13.00% vs WACC 9.70%)

What it sells, where it sells

Operating segments

United Stateslargest single market, early ramp26%

UAE / Middle Eastintegrated-security projects16%

South Koreadomestic public-procurement16%

FranceEMEA #1 anchor12%

UK · Japan · India · Mexicobalance of the 140-country base30%

A single biometric-security operating segment, but the value is geographic: ~85% of revenue is export, spread across 140+ countries with a developed-market spine (US, EMEA, Japan). That diversification is the point — this is not a Korea-cyclical; the ~16% domestic slice is the smallest of the four anchors, and no single country is more than ~26% of the book.

Country mix (revenue-weighted CRP input)

🇺🇸United States26%

🇦🇪UAE16%

🇰🇷South Korea16%

🇫🇷France12%

🇬🇧United Kingdom10%

🇯🇵Japan10%

🇮🇳India8%

🇲🇽Mexico2%

Revenue-geography weights drive the country-risk premium (weighted CRP ≈ 0.81% — low, because the base is overwhelmingly developed-market). The US, UAE, Korea, France, UK and Japan are ~80% of sales; India and Mexico add the only material emerging-market premium. This is a developed-market exporter wearing a KOSDAQ ticker — the discount the market applies is governance, not geography.

Background — five things to know before the case

Context the share price doesn't carry on its face. Skim this once and the bull / bear bullets below stop reading as inside baseball.

This is the operating crown jewel, not the holdco. 236200 makes and sells the biometric readers (BioStation 3, BioStar X, Q-Vision Pro); founder-chairman Lee Jae-won controls via Suprema HQ (094840, ~30% of the opco) plus ~1.1% direct. Minorities sit below a 30% holdco — the cascade is the governance issue, priced as a residual, not in the operating flows.
A genuine net-cash, asset-light EMEA #1 exporter. ~₩125B cash, ~₩2.4B debt (D/E ~0%), ~85% export across 140+ countries, low-teens operating ROIC. FY2021→FY2025 revenue compounded ~17% (₩72.6B→₩137.3B); FY2025 op margin 23.8% is the 10-year peak (decade band 17.6–23.8%).
The "flat earnings" optic is a base-effect artifact. FY2024 pretax was inflated by ~₩15B of non-operating financial income; operating income actually grew +40.6% in FY2025 (₩23.3B→₩32.7B). The 2–3 analysts covering it model EPS "decline" off that distorted base — the operating business is accelerating, not deteriorating.
A first-ever 2026 capital-return regime. 282,962 treasury shares cancelled via profit-based 이익소각 (completed Feb 2026, ~4% of shares); a new ₩12B buyback (Apr 2026) earmarked for cancellation; and a numeric Value-Up plan — ROE target 12.7%, AI-mix 53%, dividend ≥₩400/sh 2026–28, ≥40% 3-yr payout. NPS holds 5.49%. This passes both Korea-methodology viability conditions.
The bear case is durability, not the business. The founder transferred shares to a family member (Oct 2025) just as the company discovered shareholder returns — the regime may be a one-off estate event. Plus an ongoing brand-fee/ODM payment up to the parent HQ (controller-as-licensor leakage). These feed the 0.10 residual; the cash haircut sits in the bridge.

Where we diverge from the sector

Each row asks: if we'd used the sector median for this one assumption instead of our override, how much would the share price change? Negative = our override is more conservative (worth less); positive = more aggressive (worth more). Skim down the rightmost column to see which bets are doing the work.

Assumption

Our input

Prior / sector

Effect

01Cash carried in the bridgeCouncil fix — slow controlled-opco release, not an end-discount

₩100B~20% haircut on the ₩124.6B face hoard; ~₩13–15B/yr returned while retaining 60% of earnings → PV to a minority below face

₩124.6B (face)Full face, the proposed input

conservative

02Terminal operating marginCouncil trimmed 21%→20% — mid of the through-cycle band

20.0%Through-cycle 19–21% band; the FY2025 23.8% peak is the bull case, not the floor

23.8% (FY2025 peak)10-yr high; decade band 17.6–23.8%

conservative

03Revenue growth Y1–5Faded from the FY2025 +27% project-timing spike

13%Demonstrated mid-teens trajectory; between consensus ₩153–175B FY26 and the SWS +8.5% bear; decays to ~3.7% by Y10

+27% (FY2025)Peak, on a low FY2024 base

conservative

04Terminal ROCCouncil trimmed 14%→13% — = the actual operating ROIC

13.0%A real but modest ~330bp excess over the 9.70% WACC; cash IS being released → no ROC≈WACC laziness

14% (proposed)Carried an unearned excess-return sliver

conservative

05Beta / WACCPinned to the global cross-section, not the suppressed local reg

1.199Damodaran-global Electronics (Consumer & Office) β_u 1.1926, re-levered; WACC 9.70%

0.46 (local reg)Suppressed-β trap — thin-traded small-cap KRW

conservative

Net effect of the council revisions

The council took a proposed input set and tightened every soft lever. Cash dropped from full ₩124.6B face to ₩100B in the bridge (the methodology-correct slow-release treatment). Margin trimmed 21%→20%, ROC 14%→13%, both removing peak/unearned slivers. β stayed at the global 1.199 (rejecting the 0.46 suppressed local regression is correct). Governance stayed at 0.10 — it now prices operating-flow leakage only, since the cash is handled in the bridge. After all four haircuts, fair value is still ₩90,276 — a +44% margin of safety. The conservatism is the point: the BUY survives the council's own knife.

₩90.3k

Our input Prior / sector Adds value Subtracts value

The story & the five claims

The 10-year story this DCF is built on, plus the five anchor claims that translate the story into model inputs.

The 10-year story

Suprema is the rare Korean controlled name where the business is unambiguously good and the entire argument is about whether the cash ever reaches you. The operating company is the EMEA #1 in biometric access control — #7–8 globally, present in 140+ countries, ~85% export, asset-light and net-cash, transitioning from fingerprint hardware into a face-AI and software platform. FY2025 revenue grew 27% and operating income grew 41%, both at cycle peaks, and the market still prices it at ~10–12x trailing earnings because headline net income looks flat — an artifact of a FY2024 base inflated by one-off financial income. The base case fades that peak honestly: revenue compounds mid-teens, not 27%, decaying to the KRW risk-free by year ten; the operating margin normalises to 20%, the middle of the through-cycle band, not the 24% peak; and terminal ROC sits at the company's actual 13%, a modest but real excess over the 9.7% WACC. The crux is the cash and the governance. About 40% of the market cap is a cash hoard, and a controlled opco under a 30% holdco does not return that hoard at face to a minority — so rather than bolt a flat Korea discount on the end, the cash is haircut ~20% in the bridge to reflect its slow, partial release (~₩13–15B a year while 60% of earnings are retained). What earns the small 0.10 governance residual is genuinely new: a first-ever dividend, a buyback that has actually been cancelled (not parked in treasury), and a numeric Value-Up plan — which together pass both Korea-methodology viability conditions, so this is a pass, not a trap. The council's verdict is honest about the catch: this is a real business whose +44% margin of safety is conditional on that 2026 capital-return regime proving durable rather than being a one-off tied to the founder's family share transfer. Fair value lands at ₩90,276 against a ₩50,800 price, and across 1,000 stressed draws not one falls below the market — but the kill-criterion is simple: if FY2026's dividend isn't paid and the buyback isn't cancelled, the thesis is dead regardless of this number.

Two debates worth pressure-testing

Isn't 40% of the market cap in cash an automatic margin of safety?

Our view: Only if it reaches you. A controlled opco under a 30% holdco returning ~₩13–15B/yr against a ₩124.6B pile, while retaining 60% of earnings, does not return the hoard at face — its present value to a minority is below face. The methodology fix is a cash haircut in the bridge (~20%, to ₩100B), NOT a flat end-discount and NOT carrying it whole. Even after that haircut the MoS is +44%, but the cash is a slow-release asset, not free money.

If the AI/software mix is climbing 43%→53%, why fade the margin DOWN?

Our view: Because the 10-yr margin band (17.6–23.8%) has not yet shown a structural break upward, and FY2025's 23.8% is the high-water mark of a company that was flat at ₩50–60B revenue for half the prior decade. The full-software re-rate to 28–30% is the bull case — real optionality (BioStar X subscriptions, Q-Vision Pro, the Hyundai Robotics MoU), but it lives in the Monte-Carlo tail, not the base. We normalise to 20%, the middle of the through-cycle band; the upside is a free option, not the thesis.

CLAIM 01Revenue fades from +27% to mid-teens, ~₩320B by Y10.growth 13% Y1–5 → 3.7% terminalStraight extrapolation of the demonstrated ~17% trajectory, not the FY2025 peak. Between consensus ₩153–175B FY26 and the SWS +8.5% bear; decays to the KRW risk-free by Y10.

CLAIM 02Terminal margin normalised to 20%, not the 24% peak.target op margin 20% · converge by Y5Mid of the through-cycle 19–21% band. FY2025 23.8% is the decade peak; 22–24% is the bull case predicated on a full AI-mix climb that hasn't yet broken the band upward.

CLAIM 03Reinvestment is cheap off a small, high-returning base.sales-to-capital 3.0 → 2.5Asset-light, net-cash; growth funded by export-channel + working-capital build, not heavy capex. Well below the distorted 8-firm industry print of 5.57, which we reject.

CLAIM 04Passes both Korea viability conditions — not a trap.cash haircut in bridge · governance_discount 0.10First dividend ≥₩400/sh AND buyback-and-cancel (282,962 shares retired) AND a numeric Value-Up plan. Cash is released slowly → handled in the bridge; the residual prices brand-fee leakage + succession dilution only.

CLAIM 05Net-cash fortress; terminal ROC 13% > WACC; g 3.0%.ROC 13% · failure prob 0.0 · terminal g 3.0%ROC = the actual operating ROIC, a modest ~330bp excess over the 9.70% WACC. Cannot go bust (net-cash, asset-light). Terminal g below the KRW rf 3.7% ceiling.

Where we diverge from sell-side

We read "flat earnings" as a base artifact. Sell-side models EPS decline off a FY2024 base inflated by ~₩15B one-off financial income; operating income actually grew +40.6%.
We handle the cash in the bridge, not at face and not as a flat discount. A ~20% haircut to ₩100B reflects slow controlled-opco release — the methodology-correct treatment a face-value carry ignores.
We pin β to the global cross-section, not the suppressed local regression. 1.199 (global Electronics β_u), rejecting the 0.46 thin-trade outlier; the credible local reg (1.14) nearly matches it.
We credit the 2026 regime as a pass, not a chaebol discount. Buyback-and-cancel + first dividend + numeric Value-Up pass both viability tests, so the residual is 0.10, near the most pro-minority name in the book.
We fade the peak, not extrapolate it. Margin to 20% (not 24%), growth to mid-teens (not 27%), ROC to 13% — the through-cycle versions of demonstrated history.

Two-sided case — bear anchors

The capital return proves cosmetic. The central bear case. If FY2026's dividend isn't paid AND the ₩12B buyback is parked in treasury rather than cancelled, the regime was a one-off and the thesis is dead — the kill-criterion.
The dividend was an estate event, not a policy. The founder transferred shares to a family member just as returns appeared; the generosity may serve the succession, not the minority, and can evaporate once the family event is done.
The cash stays trapped for chairman optionality. ~40% of the cap is a hoard the controlling family decides when to release; a KB-flagged AI-camera M&A could consume it instead of returning it.
The margin reverts to the low end. Half the prior decade saw revenue flat at ₩50–60B and margins as low as 17.6%; the 20% base could prove generous if 2021–25 was one good wave.
KRW strength and KOSDAQ liquidity. ~85% export means a strengthening won hits translated revenue; thin float and FX on a foreign position raise the cost of both the entry and the eventual re-rate exit.

Risks to thesis (tail, not bear case)

Capital-return durabilityHigh

The load-bearing risk and the kill-criterion. If the FY2026 dividend (≥₩400/sh) isn't paid AND the ₩12B buyback isn't cancelled, the thesis is dead regardless of the DCF. Carried in the MC governance band (0.05/0.10/0.20).

Trapped cash / family controlHigh

~40% of the cap is a hoard the controlling family decides when to release; ~₩13–15B/yr against ₩124.6B. Priced via the ~20% bridge haircut, not at face — a worse release path justifies more.

Margin reversionMed

FY2025's 23.8% is the decade peak; the band has been as low as 17.6%. We model 20%, but a reversion toward 19% on slower AI-mix leverage is the second-order downside.

Brand-fee / succession leakageMed

An ongoing brand-royalty / ODM payment up to parent Suprema HQ (controller-as-licensor) plus live 3rd-gen succession transfers. This is what the 0.10 residual prices, since cash is in the bridge.

KRW FX / KOSDAQ liquidityLow

~85% export → won strength is a translated-revenue headwind; thin float and FX on a foreign position raise the cost of entry and exit. Manageable, but real on a ±10%/week name.

10-year forecast

Revenue compounds ₩155B → ₩361B over 10y (~13% Y1–5 fading to ~3.7% terminal); operating margin normalises to 20%, the middle of the through-cycle 19–21% band — below the FY2025 23.8% peak, not above it. FCFF is strongly positive throughout (net-cash, asset-light), so the value is real operating cash. The ₩124.6B cash hoard is haircut ~20% in the bridge (to ₩100B), reflecting its slow release to a minority rather than a face-value carry.

Monte Carlo distribution

Across 1,000 correlated draws — growth, margin, terminal growth, β/WACC and the residual governance discount stressed jointly (the governance band widened to 0.05/0.10/0.20 to carry the capital-return-durability/trap tail) — the p5 outcome is ₩74.9k/share, still ~47% above the ₩50,800 price, and not one draw lands below the market (P(intrinsic < market) = 0.0%). The MC samples the modelling uncertainty; what it cannot sample is the discrete kill-event — the 2026 dividend going unpaid or the buyback being parked in treasury, which would invalidate the thesis outright.

Mean ₩90372.45 ± ₩10220.73/sh, 1000 iterations (0 failed). P(intrinsic < market ₩50800.00) = 0.0%.

Cost of capital build

Risk-free rate	3.70%
Mature-market ERP	4.36%
Levered β	1.20
Weighted CRP	0.81%
Cost of equity	9.74%
Pre-tax cost of debt (synth Aaa/AAA)	4.10%
D / V	~1%
WACC	9.70%

Full year-by-year DCF

Year	Revenue	Op mgn	EBIT	EBIT(1−t)	Reinvest	FCFF	PV
1	₩155.15B	23.08%	₩35.81B	₩31.69B	₩5.95B	₩25.74B	₩23.47B
2	₩175.32B	22.31%	₩39.11B	₩34.62B	₩6.72B	₩27.89B	₩23.18B
3	₩198.11B	21.54%	₩42.67B	₩37.77B	₩7.60B	₩30.17B	₩22.85B
4	₩223.87B	20.77%	₩46.50B	₩41.15B	₩8.58B	₩32.57B	₩22.49B
5	₩252.97B	20.00%	₩50.59B	₩44.78B	₩9.70B	₩35.07B	₩22.08B
6	₩281.15B	20.00%	₩56.23B	₩48.58B	₩11.27B	₩37.31B	₩21.48B
7	₩307.24B	20.00%	₩61.45B	₩51.80B	₩10.44B	₩41.36B	₩21.85B
8	₩330.04B	20.00%	₩66.01B	₩54.26B	₩9.12B	₩45.14B	₩21.95B
9	₩348.39B	20.00%	₩69.68B	₩55.81B	₩7.34B	₩48.47B	₩21.78B
10	₩361.28B	20.00%	₩72.26B	₩56.36B	₩5.16B	₩51.20B	₩21.32B

Methodology & flags

Damodaran FCFF DCF, 10y explicit + perpetuity, in KRW. Risk-free 3.70% (local-currency government bond). Synthetic credit Aaa/AAA. CRP 0.81% from revenue-weighted country mix × Damodaran 2026 CRPs. Terminal ROIC faded to 13.00%; 10% governance haircut applied post-DCF. Monte Carlo: 1000 iterations. Engine v1.0.0 · result: /Users/valentin/Documents/notes_jiliac_labs/Finance/Damodaran/valuations/suprema/output/2026-06-02-result.json

R&D cap: OFF · Lease cap: OFF · Failure: OFF · ESO: OFF
Governance haircut: 10% applied post-DCF (₩100306.52 > ₩90275.86)
Sensitivity tornado: not run

FCFF DCF · dark theme v3. Generated 2026-06-02T16:14:29 from /Users/valentin/Documents/notes_jiliac_labs/Finance/Damodaran/valuations/suprema/output/2026-06-02-result.json.