[Click eStock] "Samsung C&T, Upper Range Still Open"

Samsung Owner Family Inheritance Tax Confirmed at 11 Trillion Won... Subsidiaries' Dividend Expectations Rise

[Asia Economy Reporter Minwoo Lee] Interest in Samsung C&T is rekindling as the inheritance value of Samsung Group's listed stocks has been confirmed at approximately 11 trillion KRW. This is based on the judgment that the actual net asset value (NAV) and dividend per share (DPS) could increase beyond mere expectations.

On the 23rd, KTB Investment & Securities maintained a 'Buy' rating on Samsung C&T and raised the target price by 14.3% to 160,000 KRW. The closing price the previous day was 140,000 KRW.

Han Lee Kim, a researcher at KTB Investment & Securities, explained, "This is based on an increase in the value of listed shares, i.e., fundamentals. In a period without a clear market uptrend or leading sector, expectations for corporate governance become more prominent, reducing the discount and potentially increasing stock price elasticity."

According to the financial investment industry, the inheritance tax on the shares of the late Samsung Group Chairman Lee Kun-hee was confirmed at 11.0366 trillion KRW, reflecting the average closing price of stocks over the past four months. This figure includes a 20% premium for major shareholders, the highest inheritance tax rate of 50%, and a 3% deduction for voluntary reporting, making it the largest ever. Consequently, Samsung Electronics' dividend size is expected to be maximized to secure funds for the owner's inheritance tax. Samsung C&T, positioned at the top of the group’s governance structure and directly holding key affiliate shares, is anticipated to benefit significantly.

Amid these expectations, Samsung C&T's stock price has risen about 20% since the end of October. However, this increase lagged behind the NAV growth driven by Samsung Electronics. Despite the stock price rise, the actual value was further discounted.

The announcement of dividends from affiliates in January-February next year is also crucial. The dividend announcements from affiliates are expected to enhance Samsung C&T's fundamentals. Dividend income will reduce net borrowings, and the year-end dividend increase in 2020 is likely to lead to an upward revision of Samsung C&T's DPS in 2021. For every additional 1 trillion KRW dividend from Samsung Electronics, Samsung C&T’s dividend income is 44 billion KRW, increasing DPS by at least 160 KRW. Based on Samsung Electronics’ current annual dividend level of 9.6 trillion KRW, dividend income inflow is estimated at 423.2 billion KRW.

Meanwhile, according to relevant laws, the taxable value and tax base of inheritance tax must be reported within six months from the end of the month in which the inheritance commencement date falls. Therefore, the inheritance structure is expected to be revealed by April.

This content was produced with the assistance of AI translation services.