Samsung Electronics [Yonhap]
Samsung Electronics [Yonhap]

"Is 110 trillion won in shareholder returns really too little?" one Samsung Electronics retail investor wrote online.

"Will SK hynix go up on Monday while only Samsung Electronics falls?" another asked.

Samsung Electronics shares tumbled in after-hours trading immediately after the company announced a shareholder return program of up to 110 trillion won ($79 billion). Analysts say the selloff partly reflects the dissipation of a buy-the-rumor dynamic, but attribute much of the decline to disappointment that the plan fell short of expectations — especially compared with SK hynix's announcement.

Samsung Electronics closed regular trading Friday up 3.87 percent at 281,500 won per share. During the session, the stock climbed as high as 285,000 won, putting the closely watched 300,000-won threshold within reach. After the shareholder return plan was disclosed following the close, however, the share price fell more than 4 percent below the regular-session closing price in after-hours trading, ending the extended session lower.

Analysts attribute the after-hours drop to two factors: expectations for an expanded shareholder return had already been priced into the stock before the announcement, and the company has yet to specify how it will deploy the remaining funds beyond the roughly 30 trillion won in dividends planned for the third quarter out of the maximum 110 trillion won total.

Investors drew an unfavorable comparison with SK hynix, which moved swiftly to buy back and cancel 40 trillion won worth of its own shares when its stock came under pressure. In after-hours trading, SK hynix shares in fact rose — climbing from 1.73 million won to 1.761 million won — while Samsung Electronics fell.

[Yonhap]
[Yonhap]

Earlier, SK hynix announced it would buy back roughly 40 trillion won worth of its own shares and cancel all of them, while pledging to return more than 50 percent of its free cash flow to shareholders. Unlike Samsung Electronics, the measures take effect immediately. The market cheered.

Samsung Electronics announced it would carry out a shareholder return program worth roughly 90 trillion to 110 trillion won this year, the largest ever by a domestic company. The plan calls for a cash dividend of about 30 trillion won in the third quarter, with the remaining scale and method to be decided in January next year after full-year earnings are confirmed.

Although Samsung Electronics' shareholder return program is larger in scale than SK hynix's, analysts say it failed to deliver the same market impact. Expectations had already run high — some had forecast the program would reach as much as 150 trillion won.

Among Samsung Electronics investors, anxiety over Monday's regular session is growing after the after-hours decline. Some worry that, despite the record shareholder return, Samsung Electronics may underperform SK hynix in terms of returns for now.

Analysts, however, expect any weakness to be short-lived. A shareholder return of up to 110 trillion won is not small enough to justify sustained concern about a falling share price, they say. Should Samsung Electronics shares decline further, the dividend yield would rise, potentially attracting foreign buying driven by income-seeking demand.

Meanwhile, the number of retail shareholders in Samsung Electronics — widely regarded as South Korea's "national stock" — approached 8 million in the first half of this year, reaching a record high.

According to Samsung Electronics' semiannual report, the company had 7.971 million retail shareholders as of the end of June, up about 2.92 million from roughly 5.049 million a year earlier. Given that South Korea's adult population is about 43 million, a simple calculation suggests roughly one in five adults holds Samsung Electronics shares.


park@heraldcorp.com