[Click eStock] "Samjeon's 10 Trillion Won Share Buyback, 50,000 Won Downside Support Level Imprinted"

On the 18th, Samsung Securities pointed out that Samsung Electronics' 10 trillion won share buyback acts as a short-term support level for the stock price, but in the long term, the recovery of growth expectations is important. The target price was maintained at 83,000 won with a 'Buy' investment rating.

Samsung Electronics announced a plan for share buybacks and cancellations to enhance shareholder value after the market closed on the 15th. First, it will purchase a total of 10 trillion won worth of shares (2.8% of market capitalization) in installments over the next year. As the first phase of the buyback plan, it will buy back and cancel 3 trillion won worth of shares over three months.

Researcher Jongwook Lee said, "In 2025, a total of 18.3 trillion won including dividends is expected to be used for shareholder returns, accounting for 64% of the total free cash flow."

Lee noted, "This share buyback announcement will serve as an opportunity to imprint a 50,000 won lower support level on investors," adding, "It is viewed as similar to the 2014 share buyback decision aimed at stabilizing the stock price rather than the special share buyback programs in 2015 or 2017."

He evaluated, "At that time, the stock price fell 15.5% over three months, hitting a 52-week low, but after the share buyback announcement, it rose 14.5% over the following three months. During this period, the price-to-earnings ratio (P/E) and price-to-book ratio (P/B) increased from 10.2 times and 1.0 times to 10.6 times and 1.1 times respectively, indicating that re-rating was a major cause of the stock price rise."

He added, "Above all, the share buyback decision acted as a lower support level for the stock price until 2015, based on the belief that corporate shareholder value enhancement policies could emerge at the pre-stock split price of 1.1 million won."

However, he emphasized, "Long-term stock price increases depend more on earnings per share (EPS) growth than on shareholder return policies," and "As the fundamental competitiveness of technology is restored, investors' confidence in growth will also be restored."