Yuanta: "Samsung Electronics Stock Price, Foreign Investor Demand More Important Than Treasury Stock Buyback"

Announcement of a 10 Trillion KRW Share Buyback Plan on the 15th
Profit Momentum Drives Stock Price
2016 Share Buyback Boosted Stock Price
2015 Stock Price Impact Minimal

Yonhap News

Yuanta Securities stated on the 20th that "the stock price movement was more strongly influenced by foreign investor demand than by the company's share repurchase" regarding Samsung Electronics.

Go Kyung-beom, a researcher at Yuanta Securities, analyzed Samsung Electronics' share repurchase cases, saying, "The periods accompanied by significant stock price increases were during the six share repurchase processes conducted since April 2016," and added, "In other words, the impact of profit momentum such as the semiconductor supercycle was greater than the share repurchase issue."

Samsung Electronics announced a plan on the 15th to repurchase treasury shares worth 10 trillion KRW (including preferred shares). This is the first time in six years since 2018. Of the 10 trillion KRW, 3 trillion KRW is scheduled to be purchased from November 18 to February 17 of next year, which amounts to 0.84% of common shares.

Until the complete cancellation of treasury shares in 2018, Samsung Electronics conducted nine rounds of share repurchases. The November 2014 share repurchase saw a significant stock price rebound after the announcement, defying expectations that group decision-making would be delayed due to concerns over the health deterioration of former Chairman Lee Kun-hee amid worsening performance.

The October 2015 share repurchase was carried out amid expectations related to the restructuring of Samsung Group's governance. Share cancellation was also conducted alongside, meeting market expectations for shareholder returns. Although shareholder return policies and earnings announcements met anticipated levels, the stock price movement did not indicate significant changes.

Researcher Go diagnosed, "The November 2014 share repurchase had a strong market surprise momentum, while share repurchases since 2016 were more influenced by foreign investor demand and profit momentum."

Therefore, it is necessary to examine share repurchases from the perspectives of foreign investor demand and ownership. Researcher Go pointed out, "The trigger for demand is the influence of foreign investors," and emphasized, "It is necessary to confirm a shift regarding AI competitiveness inferiority and weakening profit momentum."