Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

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Event-Driven

Below is the latest FnGuide consensus (tracking 25 local brokerages covering Samsung).The up-to-date consensus FY20 OP is ₩36.89T, slightly lower than the last time we checked.











(₩B)
2017
2018
2019
2020E
2021E
2022E


Sales
239,575.4
243,771.4
230,400.9
237,733.7
259,659.4
284,520.3


- YoY
18.68%
1.75%
-5.48%
3.18%
9.22%
9.57%


OP
53,645.0
58,886.7
27,768.5
36,894.1
46,560.7
57,872.7


- YoY
83.46%
9.77%
-52.84%
32.86%
26.20%
24.29%


NP
42,186.7
44,344.9
21,738.9
27,716.3
35,404.6
44,387.3


- YoY
85.63%
5.12%
-50.98%
27.50%
27.74%
25.37%


NP to controlling stake
41,344.6
43,890.9
21,505.1
27,480.1
35,090.2
43,997.4


EPS (₩)
5,421
6,024
3,166
4,046
5,166
6,477


BPS (₩)
28,971
35,342
37,528
40,330
43,856
48,675


DPS (₩)
4,000
4,000
4,000
4,000
1,592
1,540


Div. yield
9.57%
12.60%
8.81%
5.49%
2.19%
2.12%


PER (x)
9.40
6.42
17.63
19.23
15.06
12.01


PBR (x)
1.76
1.10
1.49
1.93
1.77
1.60

Source: FnGuide












(₩B)
2020. 12. 28
T-1M
T-3M
T-6M
T-1Y


Sales
237,733.7
238,404.0
235,845.4
230,392.4
255,006.6


OP
36,894.1
37,105.5
34,016.6
32,039.6
37,754.5


NP to controlling stake
27,480.1
27,641.0
25,586.5
24,719.4
29,153.7


EPS (₩)
4,046
4,069
3,767
3,639
4,292


PER (x)
19.20
16.40
15.40
14.30
12.80


12M PER (x)
15.06
13.23
12.42
11.96
12.81


TP (₩)
84,328
78,883
74,675
65,167
62,432

Source: FnGuide

But the difference isn't substantial enough to change my previous 3-yr FCF estimation. 









3-yr shareholder return as a % of FCF (₩T)
2018
2019
2020E
3-yr total


FCF
28.9
14.1
27.5
70.6


1. OCF
91.1
62.3
79.6
233.0


1.1 After-tax OP
42.7
19.8
26.4
-


- OP
58.9
27.8
36.9
-


- Effective tax rate
27.49%
28.57%
28.57%
-


1.2 Expenses not involving cash outflows
48.4
42.4
53.3
-


2. Investment
62.2
48.1
52.1
-


2.1 Invested capital
36.4
36.1
38.2
-


- Non-current assets (ending)
164.7
171.2
179.7
-


- Non-current assets (beginning)
154.8
164.7
171.2
-


- D&amp;A
26.5
29.6
29.6
-


2.2 Δ NOWC
25.8
12.0
13.9
-


- Current assets
174.7
181.4
193.4
-


- Current liabilities
69.1
63.8
61.9
-


- NOWC
105.6
117.6
131.5
-


Dividends
9.6
9.6
9.6
28.9


- Dividends as a % of FCF
33.24%
68.00%
34.93%
40.86%


Buyback
0
0
0
0.0


- Buyback as a % of FCF
0.00%
0.00%
0.00%
0.00%


Dividends+buyback
9.6
9.6
9.6
28.9


- Dividends+buyback as a % of FCF
33.24%
68.00%
34.93%
40.86%

Source: DART, SEIBro, &amp; FnGuide












Non-current assets (₩T)
2018
2019
1H20
2H20
FY2020E


CAPEX
29.4
26.9
17.1
18.1
35.2


D&amp;A
26.5
29.6
14.8
14.8
29.6


Non-current assets (ending)
164.7
171.2
171.8
179.7
179.7


Non-current assets (beginning)
154.8
164.7
171.2
171.8
-


Δ non-current assets
9.9
6.5
0.6
7.9
8.5

Source: Samsung Electronics












NOWC (₩T)
2018
2019
1H20
2H20
FY2020E


OP
58.9
27.8
14.6
22.3
36.9


Current assets
174.7
181.4
186.1
193.4
193.4


- Δ current assets as a % of OP
47.04%
24.13%
32.46%
32.46%
-


Current liabilities
69.1
63.8
61.9
61.9
61.9


NOWC
105.6
117.6
124.3
131.5
131.5


Δ NOWC
25.8
12.0
-
-
13.9

Source: Samsung Electronics

The additional room to meet the 3-yr 50% FCF target remains at ₩6.5T, locking a special dividend per share (ord) at ₩950, assuming no buyback.





3-yr shareholder return as a % of FCF (₩T)

FCF
70.6


: 50%
35.3


Dividends+buyback
28.9


: Room to fill up
6.5

Source: DART, SEIBro, &amp; FnGuide







Special dividends (₩T)

Room to fill up
6.5


Common DPS
₩950


: Dividends
5.7


1P DPS
₩951


: Dividends
0.8


Total dividends
6.5

Source: DART, SEIBro, &amp; FnGuide

Special div incl year-end div yield is 3.04% (ord), and interim yield sits at 1.68% at the last close.





Special div-adjusted div yield (₩T)

Common DPS (incl. special div)
₩2,366


: Price
₩77,800


: Dividend yield
3.04%


1P DPS
₩2,368


: Price
₩72,800


: Dividend yield
3.25%

Source: DART, SEIBro, &amp; FnGuide







Special &amp; interim div-adjusted div yield

Common DPS (incl. special div)
₩1,304


: Price
₩77,800


: Dividend yield
1.68%


1P DPS (incl. special div)
₩1,306


: Price
₩72,800


: Dividend yield
1.79%


Difference
0.11%p


- 1P div. yield premium
7.03%

Source: DART, SEIBro, &amp; FnGuide



Samsung Electronics Pref Shares (005935 KS)

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