Samsung has 50% upside potential – from Barrons, I propably need to have a Interactive Broker account to buy this stock
Samsung Has 50% Upside Says Nomura
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The broker just upgraded its price target on the South Korean electronics giant from KRW2,700,000 to KRW3,300,000, predicting that the so-called “Korean discount” could be about to finally disappear. Nomura says that it will now be basing its price target on a valuation of 11 times 2017 earnings, which is closer in line with Samsung’s global electronics peers.
Here’s more about the potential end to the discount:
In our view, one of Samsung’s (SEC) discount factors related to corporate governance (CG) is highly likely to disappear. We think there is even further upside regarding our target multiple if SEC’s ne shareholder return policy to be announced at the end of the year is better than the previous one and is getting close to the policies of advanced global peers.
What this refers to is Samsung’s decision to pay a first ever quarterly dividend of KRW7,000 a share, as my colleague Isabella Zhong wrote on a couple of days back. Samsung’s shares soared after the company announced a 48% leap in operating profits for its March quarter to their highest level in four years.
Nomura is full of praise for Samsung’s moves to show shareholders a bit more love and thinks more South Korean companies could follow suit:
SEC is transforming into an exemplary company in terms of shareholder-friendly CG with 1) quarterly dividends, 2) cancellation of treasury shares (13%) and 3) announcement of more improved shareholder return policy in year end. We are surprised by the rapid SEC’s progress in CG, and we expect this positive exemplary change to spread to other companies as well.
Samsung’s stock was flying again this morning, up more than 2%. The shares have returned 24% year-to-date.
