Samsung Electronics Falls 7% Alone as Analysts Predict 600 Trillion Won in Shareholder Returns — Why?

[Financial News] Samsung Electronics' stock fell more than 6% in early trading on the 24th. Analysts in the securities industry had projected that the company would generate more than 600 trillion won in shareholder-return resources, but the market's selling pressure intensified as the amount to be used for treasury share buybacks and cancellations, as well as the timing of execution, had not been decided.
According to the Korea Exchange, Samsung Electronics was trading at 260,250 won at 11:03 a.m., down 7.64% from the previous session. The stock opened at 271,500 won and extended its losses. At the same time, the KOSPI (Korea Composite Stock Price Index) was down 1.34% at 6,820.07. On the Korea Exchange Main Board, individual investors bought a net 980 billion won worth of shares, while foreign investors and institutions sold a net 940 billion won and 200 billion won, respectively.

The decline appears to stem from uncertainty over how Samsung Electronics plans to deploy its shareholder-return resources. At a board meeting on the 21st, the company said it expects shareholder-return resources for 2026 to reach 90 trillion to 110 trillion won. Of that total, about 30 trillion won, including 2.45 trillion won in regular quarterly dividends and 27.55 trillion won in additional cash dividends, will be paid in the third quarter of this year.
The remaining resources will be used for cash dividends or treasury share buybacks and cancellations. However, the method and timing of the additional returns will be disclosed in October, while the exact scale and execution plan will be finalized in January next year. In other words, the total resources have been announced, but the size of the treasury share cancellations, which directly affect the stock price, has not yet been determined.
Some analysts also said the scale of treasury share cancellations could be limited. In a report released on the 24th, DS Investment & Securities Co., Ltd. said the combined stake in Samsung Electronics common shares held by Samsung Life Insurance and Samsung Fire & Marine Insurance had approached 10%. The firm explained that if Samsung Electronics buys additional common shares and cancels them, the two financial affiliates' ownership stakes would rise, potentially creating additional approval issues under the Financial and Industrial Separation Act.
Considering this, Kim Soo-hyun, head of research at DS Investment & Securities Co., Ltd., estimated that only 10 trillion to 20 trillion won of Samsung Electronics' remaining 60 trillion to 80 trillion won in shareholder-return resources would go toward treasury share buybacks and cancellations. He said the rest would likely be distributed as cash dividends. This is not Samsung Electronics' confirmed plan, but DS Investment & Securities Co., Ltd.'s projection.
Treasury share buybacks and cancellations reduce the number of outstanding shares by retiring shares held by the company, which can affect earnings per share and per-share value. Cash dividends, by contrast, pay cash directly to shareholders. As a result, even if total shareholder returns are set at 90 trillion to 110 trillion won, the impact on the stock price could be limited if the scale of treasury share cancellations is smaller than the market expected.

In this regard, KB Securities' earlier projection for shareholder returns over the next three years is a long-term estimate of available resources. KB Securities said that if Samsung Electronics maintains its policy of returning 50% of free cash flow through 2027 to 2029, it would generate at least 600 trillion won in shareholder-return resources.
KB Securities forecast Samsung Electronics' operating profit this year at 380 trillion won and said additional shareholder-return resources after the third-quarter cash dividend could reach 80 trillion won, the upper end of the company's guidance. However, this outlook assumes future earnings, cash flow and the current return ratio are maintained. It should be distinguished from the actual execution plan to be finalized in January next year.
Separately, Samsung Electronics' 1.5 trillion won treasury share purchase for employee compensation, which began on the 24th, is distinct from shareholder returns for ordinary investors. The buyback period runs until Nov. 21. The program is intended to secure treasury shares for employee compensation, so it did not answer market questions about how much of the 90 trillion to 110 trillion won shareholder-return pool will be used for cancellations.
Ultimately, analysts said the sharp drop in Samsung Electronics' stock on the day was closely tied to uncertainty over the executable form of shareholder returns rather than the total amount. Of the 90 trillion to 110 trillion won, about 30 trillion won has been set aside for payment in the third quarter of this year, but the split between dividends and treasury share buybacks and cancellations for the remaining resources has not been finalized.
Meanwhile, Samsung Electronics plans to unveil the additional return method in October and finalize its next shareholder-return policy in January next year.
[email protected] Han Seung-gon Reporter