"Boost 'New Samsung' Stock... Executives Buy 11.7 Billion Won of Treasury Shares Despite 15% Plunge (Comprehensive)"

Executives Buy 11.7 Billion KRW of Company Shares
Lee Firm on Shareholder-Friendly Management Commitment
Innovative Technology Vision Drives Stock Price

Vice Chairman Lee Jae-yong of Samsung Electronics visited the Samsung Biologics Songdo Campus in Yeonsu-gu, Incheon Metropolitan City on the 11th to inspect the production facilities of Samsung Biologics Plant 4. (Photo by Yonhap News)

[Asia Economy Reporter Moon Chaeseok]

"Samsung must grow together with society. It must share and grow alongside customers, shareholders, partner companies, and local communities."

Samsung Electronics Chairman Lee Jae-yong declared his intention to share profits with shareholders and the company in a post titled "Challenge for the Future" on the internal bulletin board on the 27th, following his inauguration.

However, for Chairman Lee's promise to be fulfilled, it is urgent to boost Samsung Electronics' stock price, which is currently far below expectations. Right after the announcement of Lee's promotion, Samsung Electronics briefly reclaimed the "60,000 won electronics" mark but fell back to the 50,000 won range on the 28th. Although multiple adverse factors such as the global economic downturn, market recession, and US interest rate hikes coincided, both the market and the company internally share the perception that the current stock price is excessively undervalued compared to the company's intrinsic value. Traditionally, Samsung Group has been managed in an owner-centric manner, including "no labor union management," but recently it has strengthened communication with stakeholders such as shareholders. Chairman Lee's immediate declaration to share profits with shareholders and the company upon his promotion has drawn attention.

According to the Korea Exchange, the one-year return based on the closing price of 59,500 won the day before Lee's inauguration is only -15.1%. Generally, the current stock price reflects investors' expectations of the company's value six months ahead. The stock price decline in October indicates that investors have downgraded the momentum (growth driver) of the stock since April.

However, Samsung Electronics' executives have purchased company shares. Executive stock purchases serve as a "material" to boost the stock price but also represent a management act that declares confidence in the company's fundamentals and momentum to the market. According to the Financial Supervisory Service, from early this year until last month, 73 Samsung Electronics executives bought 178,200 common shares worth 11.71068 billion won. Vice Chairman Han Jong-hee, Head of the Device Experience (DX) Division; President Kyung Kye-hyun, Head of the Semiconductor (DS) Division; President Roh Tae-moon, Head of the Mobile Experience (MX) Division; and President Lee Jung-bae, Head of the DS Division Memory Business Unit, among others, purchased company shares.

There is also a view that Samsung Electronics' decision to return cash dividends on the scale of trillions of won to shareholders on the day it announced third-quarter earnings, which saw operating profit drop more than 30% year-on-year, demonstrates Chairman Lee's commitment to a "shareholder-friendly policy." The day before, Samsung Electronics resolved to pay a total cash dividend of 2.4521 trillion won, returning 361 won per common share to shareholders. As of June, there were 5,922,693 small shareholders holding Samsung Electronics common shares.

It is analyzed that semiconductor market conditions, price trends, the company's new technology and product announcements, and securing major customers have had a greater impact on stock prices than changes in Chairman Lee's personal status. For example, although Lee was detained on February 28, 2017, due to the political scandal, Samsung Electronics' one-year return was 64%. After reports of the scandal raised uncertainty about the future of the group and its owners, Samsung Electronics' stock price surged more than 60%, riding the "semiconductor supercycle" wave.

It is noteworthy that the financial investment sector (institutional investors) has given a positive evaluation of the company's vision of "developing technologies that do not exist in the world," as presented by Chairman Lee. In his post the day before, Lee cited "technology that does not exist in the world" as Samsung's vision. The "innovative technologies" Lee highlighted include Samsung Electronics DS Division's foundry leading-edge semiconductor manufacturing processes and Samsung BioLogics, a bio affiliate, possessing the world's top CDMO (Contract Development and Manufacturing Organization) technology. Since the group's two future pillars, semiconductors and bio, are based on contract manufacturing, survival without major customers is impossible. Institutional investors agree that the "special remedy" for securing customers is not Lee's inauguration but "overwhelming technological innovation," so the vision Lee presented is likely to positively influence stock price appreciation.

After monitoring Samsung Electronics' daily stock price following Lee's inauguration, Kim Rok-ho, a researcher at Hana Financial Investment, posted a report that morning stating, "Despite the semiconductor market downturn next year, Samsung Electronics plans to execute capital expenditures (Capex) to invest in infrastructure and secure leading-edge processes, laying the foundation for medium- to long-term growth." He added, "Having secured the strength to endure the downturn, the company will be able to reap the benefits of proactive investments when the market recovers."

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