If Samsung Electronics Issues ADRs Instead of M&A...

[Asia Economy Reporter Junho Hwang] As Samsung Electronics has appointed a large number of young leaders in their 30s and 40s to transform into the 'New Samsung,' concerns have been raised that issuing American Depositary Receipts (ADR) may be necessary as a strategy to ride the platform era.

Minseong Hwang, a researcher at Samsung Securities, maintained a target price and a buy rating for Samsung Electronics on the 20th, stating, "We are witnessing a turbulent era, much like when Samsung Electronics transitioned from analog to digital and surpassed Japanese competitors to emerge as a global leader," adding, "Now, as a global leader in hardware such as smartphones, Samsung must pioneer a path no one has taken before."

The path that Researcher Hwang envisions is Samsung Electronics transforming into a platform company. However, to achieve this, the company urgently needs the inflow of global talent and resources (complement) alongside internal globalization. Yet, burdened with the stigma of being the most undervalued IT company in the world, this challenge is daunting. According to him, Samsung Electronics’ cash reserves of 100 trillion KRW are not even enough to acquire Micron, a now smaller competitor in the U.S.

In response, global investors sometimes recommend buying undervalued shares of Samsung itself rather than overvalued foreign IT companies. However, in reality, using cash resources for share buybacks instead of growth is regrettable.

Researcher Hwang analyzed, "How about issuing ADRs under the pretext of investment funds needed for a U.S. semiconductor factory alongside large-scale share buybacks?" He added, "With an expected value increase worth hundreds of trillions of KRW, this could resolve the undervaluation of Samsung Electronics and allow the use of repurchased shares for mergers and acquisitions."

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