SDI, Electronics, and Mulsan Reach Simultaneous Record Highs... Revival of Samsung Group Stocks

[Asia Economy Reporter Koh Hyung-kwang] Samsung Group stocks are showing an unstoppable momentum in the domestic stock market. Following Samsung Electronics hitting an all-time high last month, Samsung Biologics, Samsung SDI, Samsung Electro-Mechanics, and Samsung C&T have successively broken 52-week highs, demonstrating a fierce upward trend among Samsung affiliates.

According to the Korea Exchange on the 12th, three stocks?Samsung Electro-Mechanics, Samsung SDI, and Samsung C&T?set new 52-week closing highs in the KOSPI market the previous day. Kim Yong-gu, a researcher at Hana Financial Investment, explained, "It is very rare for multiple group affiliate stocks to simultaneously hit new highs," adding, "Although market volatility has increased due to the spread of the novel coronavirus (Wuhan pneumonia), Samsung Group stocks are leading the bullish trend based on solid earnings."

The revival of Samsung Group stocks was initiated by the group's eldest sibling and the top company by market capitalization in Korea, Samsung Electronics. Since the 2018 stock split, the stock price had been on a downward trend, falling to the 30,000 KRW level, leading to sarcastic remarks calling it 'Samman Electronics' (Thirty-thousand Electronics). However, expectations for increased semiconductor demand and industry recovery in the second half of last year sparked a rebound. The stock price surpassed the post-split trading price of 52,300 KRW from November last year after about a year and five months, and last month, it broke through 60,000 KRW for the first time ever, showing a sharp upward trend.

Samsung SDI has been on a daily record-high streak. Along with rising demand for secondary batteries, the stock surged over 6% the previous day on news of establishing a joint venture with EcoPro BM to produce next-generation battery materials. This year, out of 27 trading days until the previous day, there were only six days of decline, indicating a steep upward trend. During this period, it recorded a 43.6% increase.

Samsung Electro-Mechanics closed at 141,000 KRW, up 6.0% from the previous day. With the introduction of 5G smartphones, demand for major components such as multilayer ceramic capacitors (MLCC) is expected to surge, boosting the stock price since the second half of last year. It has jumped nearly 40% in the last three months alone. Compared to the low point on August 7 last year, when the stock was 84,100 KRW, it has risen by 67%.

Samsung Biologics, which was once at risk of delisting, has also revived. Two days ago, Samsung Biologics closed at 530,000 KRW, setting a new 52-week high. It entered the market in the second half of 2016 at around 120,000 KRW and attracted attention by reaching 600,000 KRW in less than two years. However, after the accounting fraud issue surfaced, the stock price plummeted to around 240,000 KRW, halving in a short period. Nevertheless, as orders and earnings gradually recovered, the stock price began to climb steadily. Since August last year, supported by solid earnings, the stock price has surged more than twice. Its market capitalization exceeded 35 trillion KRW, surpassing LG Chem and Naver to rank third in market cap.

Samsung C&T is also showing signs of recovery from its slump. Last year, Samsung C&T struggled due to group-related negative factors and poor earnings. However, as Samsung Electronics and Samsung Biologics, in which it holds shares, revived, Samsung C&T's stock price has gradually risen since the second half of last year, closing at 119,000 KRW the previous day, marking a 52-week high. This is the highest price since January 31 last year (120,000 KRW) and represents a 41% increase compared to the low point on August 7 last year (84,100 KRW). Samsung C&T holds a 5.01% stake in Samsung Electronics, and Samsung Biologics holds 43.4%, making them the largest shareholders.

Seo Sang-young, a researcher at Kiwoom Securities, said, "Even during market corrections, Samsung Group stocks are pushing forward, occupying four of the top 10 KOSPI stocks by market capitalization," adding, "Samsung affiliates are all benefiting from improvements in the semiconductor industry, expansion of secondary battery demand, and the introduction of 5G."