SK Securities said on the 24th that Samsung C&T(028260) is expected to benefit directly from Samsung Electronics' announcement of expanded dividends. It maintained a "buy" recommendation and raised its target price 22.2% to 550,000 won from 450,000 won. The previous session's closing price was 395,500 won.
Earlier, Samsung Electronics said on the 21st that this year's remaining funds for shareholder returns (the remainder after deductions from 50% of total FCF over three years) amount to about 90 trillion to 110 trillion won and that it plans to carry out a cash dividend of around 30 trillion won within the third quarter this year. This far exceeds the combined dividends for the first and second quarters (490 billion won).
Choi Gwan-soon, an analyst at SK Securities, said, "If Samsung Electronics executes a dividend of around 30 trillion won in the third quarter this year, the dividend income Samsung C&T will receive from Samsung Electronics (from the fourth quarter last year to the third quarter this year) is expected to reach 1.7 trillion won," adding, "Including this, total dividend income from affiliates will come to 2 trillion won."
Samsung C&T is continuing a shareholder return policy of re-dividing 60% to 70% of dividend income from affiliates through 2028. Choi said, "If a 70% re-division rate is applied, Samsung C&T's dividend per share (DPS) this year will be 8,550 won, a 205% surge from the previous year," adding, "This is well above the current market consensus (4,477 won)."
The trend of strengthening shareholder returns is expected to become even more visible. In addition to a 5.11% equity stake in Samsung Electronics, Samsung C&T holds a 19.34% equity stake in Samsung Life Insurance.
Choi said, "If Samsung Life Insurance pursues a special dividend and other measures to meet its mid- to long-term shareholder return target of 50%, Samsung C&T's dividend income from affiliates could increase further."
Choi added, "With the rebound in Samsung Electronics' share price, market expectations for shareholder returns are turning into conviction," adding, "As visibility on expanded shareholder returns is secured, share price upside momentum will grow even further."