Samsung Electronics(005930) released an all-time large-scale shareholder return plan, yet its stock price fell. This is the exact opposite of SK hynix, whose share price rose after it released its shareholder return policy.
It appears investors who had hoped for up to 200 trillion won in shareholder returns, in line with initial expectations in the securities market, were disappointed as the plan fell short and, seemingly recognizing governance issues, the company did not release a share cancellation plan except for employee compensation, prompting them to sell.
On the 24th, Samsung Electronics closed at 257,000 won, down 8.70% (24,500 won) from the previous trading day. Samsung Electronics(1P) (189,300 won) also fell 8.55%.
On the 21st, right after the close of regular trading, Samsung Electronics released a shareholder return plan of up to 110 trillion won at a board meeting held that day. But in regular trading after the board meeting, Samsung Electronics shares traded at a lower price than the previous trading day. Before the shareholder return plan was released on the 21st, Samsung Electronics rose 3.87% to 281,500 won, and Samsung Electronics(1P) climbed 8.26% to 207,000 won.
Experts said the actual size of the shareholder return did not meet the expectations of investors who were looking for a "surprise" right away. Samsung Electronics plans to carry out shareholder returns of about 90 trillion to 110 trillion won this year. It plans to pay about 30 trillion won in cash dividends first, including the regular third-quarter dividend this year.
The shareholder return of up to 110 trillion won is five times the largest return Samsung Electronics had previously released (20.3 trillion won in 2020) and far larger than SK hynix's previously released plan (40 trillion won).
However, considering that the securities industry had expected Samsung Electronics could release shareholder returns of up to 200 trillion won, it was not a "surprise plan" that would startle investors.
Choi Bo-young, a researcher at Kyobo Securities, said, "Recently, expectations that this year's shareholder returns at Samsung Electronics could expand to about 140 trillion won were priced into the stock, but the actual figure presented was 90 trillion to 110 trillion won, up to 30 trillion to 50 trillion won below the market's upper-end expectations," adding, "The absolute size is the largest ever, but it falls short of the aggressive share repurchase and cancellation expansion that had been expected, so it is hard to see it as a surprise return."
Earlier, SK hynix expanded its shareholder return size, but in Samsung Electronics' case, the lack of change from the previously released plan also appears to have disappointed investors. SK hynix raised the return size for cumulative FCF in 2025–2027 from "within 50%" to "50% or more." By contrast, Samsung Electronics kept 50% of cumulative FCF for 2024–2026.
Some also said that because Samsung Electronics' stock rose alongside SK hynix's shareholder return announcement, the share price fell as that catalyst for gains disappeared.
Lee Sang-heon, Director General of the iM Securities Research Center, said, "As SK hynix released a share cancellation, Samsung Electronics' share price rose over the past two weeks on expectations for shareholder returns," adding, "The decline today reflects profit-taking."
Kim Ki-baek, a researcher at Shinhan Investment & Securities, also said, "Samsung Electronics' shareholder return measures did not exceed market expectations and were seen as the end of the catalyst."
In addition, under the Act on the Structural Improvement of the Financial Industry, Samsung Electronics' capacity for share cancellation is estimated at 10 trillion to 20 trillion won, according to analysis in the securities market. Compared with SK hynix's share cancellation plan, that is about half.
Kim Su-hyun, head of research at DS Investment & Securities, explained, "Samsung Life Insurance and Samsung Fire & Marine Insurance each have their common-share equity in Samsung Electronics aligned at 10%, so if additional common shares are canceled, the two companies' stakes would exceed the 10% limit under the financial industry law."
He added, "Given this, a large portion of the roughly 70 trillion won in remaining shareholder returns to be finalized in January next year is expected to be executed as dividends," and said, "In the shareholder return to be executed early next year, we estimate share repurchases and cancellations at about 10 trillion to 20 trillion won and dividends at about 50 trillion to 60 trillion won."