[Click eStock] "Samsung C&T, Expectations for Enhancing Shareholder Value... Target Price Up"

Rising Expectations from Corporate Value-Up Programs
Growing Interest Due to Recent Activist Fund Shareholder Proposals
2024 Performance Expected to Maintain Positive Trend

NH Investment & Securities raised the target price for Samsung C&T from 180,000 KRW to 230,000 KRW on the 21st, reflecting increased expectations for shareholder value enhancement. The investment rating 'Buy' was also maintained.

Researchers Dongyang Kim and Seungyoung Lee of NH Investment & Securities stated, "Market expectations for shareholder value enhancement are rising due to the reduction of controlling shareholder stakes by 31.15% through a 0.65% disposal trust for inheritance tax payment, shareholder proposals from overseas activist funds (City of London and three others/1.46%, demanding dividend increases and share buybacks), and the government's announcement of plans to operate a corporate value-up program," adding, "We are raising the target price by reflecting confirmed cancellation of one-third of treasury shares held, detailed plans for full cancellation by 2026, adjustments to earnings forecasts, stock price fluctuations of listed affiliates, and a reduction in the target discount rate due to clarified treasury share cancellation plans."

Recently, a coalition of domestic and international activist funds, including City of London, submitted shareholder proposals to Samsung C&T demanding the purchase of 500 billion KRW worth of treasury shares and dividends of 4,500 KRW and 4,550 KRW per common and preferred share, respectively. This represents an increase of 76.5% and 75% over the dividend amounts proposed by Samsung C&T. This demand for additional shareholder returns comes amid Samsung C&T's recent announcement of plans to cancel approximately 1 trillion KRW worth of treasury shares.

Samsung C&T's 2024 performance is expected to reach sales of 42.3726 trillion KRW and operating profit of 2.986 trillion KRW. Researchers Dongyang Kim and Seungyoung Lee stated, "Despite increased uncertainty in the operating environment, construction (operating profit of 1.009 trillion KRW) is expected to maintain a leveled-up profit level based on order backlog including captive orders, while high growth in bio (1.1979 trillion KRW) continues, and improvements in food and beverage (144.9 billion KRW) and fashion (211.5 billion KRW) performance are also anticipated."