Samsung Electronics shares skid as record shareholder returns disappoint

SEOUL, Aug 24 : Shares of Samsung Electronics fell 8 per cent in early trade on Monday after the company’s record $79 billion shareholder-return plan disappointed investors who had expected a larger share of Samsung’s AI-fueled cash windfalls and greater clarity on share buybacks.

The South Korean chipmaker said on Friday this year's shareholder returns would be from 90 trillion won to 110 trillion won ($65 billion to $80 billion), including 30 trillion won in cash dividends in the third quarter. 

While five times the previous record-high returns of 2020, analysts said the projected returns were smaller than they had anticipated and that they had expected more details on the buyback plans.

Samsung said it continues to commit 50 per cent of free cash flow accumulated over the three-year period to shareholders, under its 2024 to 2026 shareholder return policy.

Rival SK Hynix said last week it will buy back and cancel 40 trillion won of treasury shares and allocate more ​than 50 per cent of its free ​cash flow generated ⁠between 2025 and 2027 to boost shareholder returns.

SK Hynix was up 0.4 per cent. The benchmark KOSPI index fell 1.5 per cent. 

"Unlike SK Hynix, Samsung Electronics did not mention the possibility of raising its existing shareholder return policy, nor did it announce a plan to cancel treasury shares that could more directly contribute to the stock price increase, which is disappointing," Sohn In-joon, an analyst at Eugene Securities, said in a report. 

"Big capital returns, slightly below expectations," Morgan Stanley said in a report.

It said investors would need to watch Samsung’s January decision on the allocation of the remaining 60 trillion won to 80 trillion won, as well as the company’s next capital-return framework, which will take effect next year.