[Click eStock] "Samsung SDS, Owner's Stake Sale... Stock Price Drop Is a Buying Opportunity"

Samsung SDS Headquarters
Photo by Yonhap News

[Asia Economy Reporter Hwang Yoon-joo] On the 23rd, SK Securities maintained a 'Buy' rating and a target price of 200,000 KRW for Samsung SDS, stating that although there is a possibility of additional share sales by the owner family, it is unrelated to the fundamentals and there is no change in the governance structure.

Choi Kwan-soon, a researcher at SK Securities, said, "Profitability is expected to improve in the first quarter. We consider the excessive stock price decline as a buying opportunity."

Researcher Choi evaluated, "The trust contract period for President Lee Boo-jin and Director Lee Seo-hyun was until April 25, 2022, so this block deal is a release of the anticipated volume."

He analyzed, "In the short term, it can be seen as a resolution of the overhang, but considering the inheritance tax amount of the owner family after Chairman Lee Kun-hee's passing (totaling more than 12 trillion KRW), the possibility of additional share sales is also high."

Earlier, it was reported that 3.9% (3,018,860 shares) of Samsung SDS shares were sold through a block deal. The block deal volume is estimated to be from President Lee Boo-jin and Director Lee Seo-hyun, with a discount rate known to be around 7.5~9.0%. As a result, Samsung SDS's stock price fell by 7.1% the previous day.

Researcher Choi stated, "The owner family's share sales are unrelated to the fundamentals," and added, "The combined shares of Samsung affiliates and the owner family still exceed 50%, so there is no issue with the governance structure."

He also said, "In the first quarter of this year, the one-time cost factor (incentives) from the fourth quarter of last year will be eliminated, leading to expected profitability improvement, and the long-term growth story through expanding external customers remains valid."

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