The South Korean market has shown promising growth, up 2.5% over the last week and 4.6% over the past 12 months, with earnings forecasted to grow by 29% annually. In this favorable environment, identifying stocks with strong fundamentals can be particularly rewarding; here we explore Young Poong Precision and two other hidden small caps that stand out.

Click here to see the full list of 189 stocks from our KRX Undiscovered Gems With Strong Fundamentals screener.

Here's a peek at a few of the choices from the screener.

Simply Wall St Value Rating: ★★★★★★

Overview: Young Poong Precision Corporation develops, manufactures, and sells chemical process pumps in South Korea and internationally, with a market cap of ₩334.69 billion.

Operations: Young Poong Precision generates revenue primarily from the sale of chemical process pumps. The company has experienced fluctuations in its net profit margin, which has impacted overall profitability.

Young Poong Precision, a small-cap entity in South Korea, has shown promising financial health with earnings growth of 10.1% over the past year, surpassing the Machinery industry's 5.4%. The company is debt-free and trades at 79.8% below its estimated fair value. Recent news includes an acquisition offer by Korea Corporate Investment Holdings for approximately ₩140 billion (US$105 million), expected to finalize by October 4, 2024.

Simply Wall St Value Rating: ★★★★★☆

Overview: Soulbrain Holdings Co., Ltd. develops, manufactures, and supplies core materials for the semiconductor, display, and secondary battery cell industries in South Korea and internationally with a market cap of ₩1.18 trillion.

Operations: Soulbrain Holdings generates revenue primarily from product manufacturing (₩428.42 billion) and distribution and service (₩105.34 billion).

Soulbrain Holdings, a notable player in South Korea's chemical industry, has shown promising signs despite its small cap status. Over the past year, earnings grew by 2.4%, outpacing the broader chemicals sector which saw a -5.1% decline. The company's net debt to equity ratio stands at a satisfactory 3.3%, and interest payments are well covered by EBIT at 7.6x coverage. Trading at 69% below its estimated fair value, Soulbrain seems undervalued with substantial growth potential ahead.

Simply Wall St Value Rating: ★★★★☆☆

Overview: FnGuide Inc. provides online-based financial information services and has a market cap of ₩436.41 billion.

Operations: FnGuide Inc. generates revenue primarily from its online financial information services, amounting to ₩31.33 billion. The company's market cap stands at ₩436.41 billion.

FnGuide, a small cap in South Korea's financial sector, has shown impressive earnings growth of 38.8% over the past year, outpacing the industry average of 21.5%. The company's net debt to equity ratio stands at a satisfactory 10.3%, indicating prudent financial management. A significant one-off gain of ₩2.5B impacted its latest financial results as of June 2024. Despite high volatility in its share price over the last three months, FnGuide remains free cash flow positive and profitable with EBIT covering interest payments by 20.6 times.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.