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

Sanghyun Park

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

Korea / Special Sits, Pairs, Index Rebalancing

Samsung Electronics FY18~20 FCF Estimations & Issues

Samsung Electronics Earnings Review and Read Thru

LJY's New Samsung May Begin with Sale of Financial Arm (Life)

Samsung Group Chairman Lee Kun-Hee Passes Away

Samsung Dividend Play, Hedging-Adjusted with Futures

Event-Driven

The market is awaiting two news from the October 29 3Q earnings call concerning shareholder return.The first one is a special dividend (or buyback) to meet the 50% 3-yr rolling FCF target.My estimation of the remaining room to hit the target is ₩10T, giving a ₩1,350 additional dividend. The latest estimation put out by a local brokerage (KTB) is ₩6.2T, delivering a ₩914 special dividend.But please be aware that buyback instead of dividend is always possible.The other one is a new 3-yr shareholder return plan.The current one ends this year. Given the narrative heard lately, Samsung will likely continue the current level (50% FCF), if not more generous.Well, the passing of Chairman Lee Kun-hee results in immense inheritance taxes. The family also needs a very generous shareholder return from Electronics.<div class="content-highlight">
The latest report today by Chosun strongly speculates that the family won't take any creative path to address the tax situation.
They will directly inherit all of the father-owned stocks and pay inheritance taxes accordingly.
<a href="http://www.investchosun.com/2020/10/27/3254585" target="_blank" rel="noopener">The link to the Chosun report.</a>
</div>So, the chances are pretty high that we will hear both this Thursday.Then, the question is buyback or dividend.Even for a new 3-yr plan, buyback-heavy or dividend-focused?

The market is awaiting two news from the October 29 3Q earnings call concerning shareholder return.The first one is a special dividend (or buyback) to meet the 50% 3-yr rolling FCF target.My estimation of the remaining room to hit the target is ₩10T, giving a ₩1,350 additional dividend. The latest estimation put out by a local brokerage (KTB) is ₩6.2T, delivering a ₩914 special dividend.But please be aware that buyback instead of dividend is always possible.The other one is a new 3-yr shareholder return plan.The current one ends this year. Given the narrative heard lately, Samsung will likely continue the current level (50% FCF), if not more generous.Well, the passing of Chairman Lee Kun-hee results in immense inheritance taxes. The family also needs a very generous shareholder return from Electronics.
The latest report today by Chosun strongly speculates that the family won't take any creative path to address the tax situation.
They will directly inherit all of the father-owned stocks and pay inheritance taxes accordingly.
The link to the Chosun report.
So, the chances are pretty high that we will hear both this Thursday.Then, the question is buyback or dividend.Even for a new 3-yr plan, buyback-heavy or dividend-focused?

Samsung Electronics Pref Shares (005935 KS)

Samsung Elec Dividend or Buyback? Tax & Net Cash-In Calculations to the Family