Is Samsung Stock Heading to Rise?
Samsung Electronics Co Ltd (KRX:005930) is instituting several important changes as calls from multiple parties are pushing for the company to part with more of its growing cash pile, restructure its governance, and appoint more diverse board members.
In what’s good news for Samsung stock, the company has begun to comply with some of the measures that international investors have been calling for, specifically by raising its dividends and planning to return any cash in excess of 70 trillion Korean won (US$59.8 billion) to shareholders. As of the end of September, the company had hit that $60.0-billion threshold, meaning that most of the profits for the remainder of 2016 should find their way into shareholder pockets, if all things go according to plan.
There is also an increased movement for the corporation to split into a holding company and an operating one. As The Wall Street Journal reports, “Samsung’s archaic shareholding structure, which has allowed the founding Lee family to maintain control within the group, is a major reason for Samsung’s depressed valuations.” (Source: “Samsung Keeps Investors Waiting for Big Move,” The Wall Street Journal, November 29, 2016.)
This restructuring could help with the governance issue faced by Samsung stock.
“We view the plan outlined by Samsung to be a constructive initial step,” Elliott Management said in a statement. “We anticipate more meaningful changes following the company’s corporate structure review.”
But, with what is being widely touted as steps in the right direction, things might be looking up for Samsung stock heading into 2017.