Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Samsung, SK to announce Corporate Value-up plans: analysts
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By Park Jae-hyuk
Conglomerates comply with request to stimulate domestic stock market
Samsung and SK are the next major business groups expected to reveal plans to enhance their stock values, following Hyundai Motor, LG, and POSCO, which have already supported the government's efforts to boost the domestic stock market.
In particular, Samsung C&T and SK Square are expected to be the first affiliates to announce value-enhancement strategies before the financial authorities release the value-up index later this month.
“Samsung C&T is riding the wave with Samsung Biologics’ performance boost, while SK Square is killing it with a big jump in operating profits thanks to the semiconductor boom,” said Park Sang-hyun, an analyst at SmartKarma, a Singapore-based investment research firm.
Samsung C&T, which supervises the group’s construction, trading, fashion and resort businesses, is the parent firm of Samsung Biologics. SK Square, one of the group’s intermediate holding companies, is the parent firm of SK hynix.
“Word on the street is that Samsung is gearing up to jump into the value-up game for the first time, with Samsung C&T and Samsung Electronics likely dropping something in early September,” Park said.
“On the SK Group front, with their group rebalancing still in the works, SK Square is pretty much the only one in the mix with the bandwidth to make a value-up move right now, so all signs point to it being the sole participant for now.”
Earlier this year, Samsung C&T announced its plan to retire all its treasury stocks by 2026.
However, securities analysts believe the company still has room to increase shareholder returns due to its strong profits.
“Considering the potential announcement of additional shareholder return policies in line with the government’s value-up program and the size of treasury stocks to be retired, the company can improve its return on equity,” IBK Securities analyst Cho Jung-hyun said.
SK Square CEO Han Myung-jin recently told employees that he will begin advancing the value-up and securitization of existing portfolios in the second half of this year.
“I will strengthen the company’s capability as a global chip-centric investment firm,” he said.
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In response to the government’s efforts to tackle the so-called Korea discount, or undervaluation of Korean assets compared to their global counterparts, non-financial conglomerates recently joined financial companies in coming up with value-up strategies.
Last Wednesday, Hyundai Motor held a CEO Investor Day event to announce its plans to increase quarterly dividends to 2,500 won ($1.9) per share from 2,000 won per stock and to pursue more share buybacks and cancellations.
A day later, LG Group said its holding firm, LG Corp., will start buying 200 billion won worth of shares in LG Electronics and 300 billion in LG Chem stocks in November, as part of efforts to increase their corporate value.
LG Electronics held an Investor Forum, Aug. 21, and gave a prior notice of the announcement of its corporate value-up plan during the fourth quarter.
POSCO Holdings, POSCO Future M, and POSCO International also announced similar plans, Thursday.
During a meeting with executives from the nation’s 10 largest conglomerates, Korea Exchange CEO Jeong Eun-bo asked them to join the government-led value-up program.