Samsung Electronics Steps Up 'Stock Price Defense'... Retail Investors Cheer, Saying "We Believed"

Samsung Electronics Announces '10 Trillion KRW Share Buyback Over One Year'
3 Trillion KRW to Be Burned Within 3 Months...Strong Commitment to 'Stock Price Defense'

Samsung Electronics' decision to repurchase its own shares worth 10 trillion won is interpreted as a strong commitment to defending its stock price. Individual investors, who had been vocal about the recent sharp decline in the stock price, are also reacting positively.

On the 15th, Samsung Electronics held a board meeting and announced a plan to repurchase its own shares worth a total of 10 trillion won over the next year in installments. The purpose is to 'enhance shareholder value.' In particular, it plans to buy back and cancel all shares worth about 3 trillion won within three months.

The stock market, which opened one hour later on the CSAT day, saw the KOSPI index start with a slight increase, and Samsung Electronics, which had been declining, turned to an upward trend. A KOSDAQ listing ceremony for a company is taking place at the Korea Exchange Seoul office. Photo by Heo Young-han

Samsung Electronics plans to repurchase and cancel 50,144,628 common shares and 6,912,036 preferred shares through on-market purchases from the 18th of this month until February 17 of next year. Regarding the remaining 7 trillion won worth of treasury shares, the company explained that it will discuss and decide on various utilization methods and timing from the perspective of enhancing shareholder value when individual board resolutions for treasury share acquisition are made.

Previously, Samsung Electronics repurchased treasury shares worth 9.3 trillion won in 2017 and canceled 50% of the treasury shares held by the company. This effort increased the value per share, and now, after seven years, the company is undertaking a large-scale treasury share repurchase again. At that time, as part of a 'shareholder-friendly policy,' the canceled treasury shares amounted to about 4.8 trillion won, including 450 million common shares and 80 million preferred shares.

Following the announcement of the shareholder return plan, individual investors are also reacting positively. One investor requested on a stock community forum, "I trust Chairman Lee Jae-yong," asking for all repurchased treasury shares to be canceled. When treasury shares are canceled, the circulating supply decreases, thereby increasing the value per share.

Samsung Electronics' recent decision appears to be a response to the ongoing stock price decline caused by poor earnings, intensified US-China conflicts due to the potential re-election of Trump, and a worsening semiconductor market outlook.

Earlier this year, executives including Han Jong-hee, head of the Device Experience (DX) division, and Jeon Young-hyun, head of the Device Solutions (DS) division, purchased treasury shares to demonstrate responsible management, but the stock price continued to decline. The previous day, the stock fell to 40,000 won for the first time in 4 years and 5 months, dropping the market capitalization below 300 trillion won. However, on the same day, the stock rebounded sharply by 7.21% to 53,500 won due to bargain buying.

In the securities industry, there has been a consistent view that Samsung Electronics' stock price decline was excessive. There were criticisms that adjustments to semiconductor demand forecasts were overly reflected in the stock price, and compared to Samsung Electronics' past profitability, the decline was excessive, indicating sufficient potential for a rise. Mirae Asset Securities set a target price of 84,000 won for Samsung Electronics, and Shinhan Investment Corp. maintained a target price of 90,000 won.