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 1P Discount Sets a New All-Time Low at 5.6%: Main Factor Behind It

Samsung Dividend Situation Creates a Huge Futures Basis: Trade Approach to Capitalize on It

Samsung Inheritance Tax Set Is Good News for Samsung Dividends

Samsung Electronics FY18~20 FCF Estimations & Issues

Samsung C/1P Price Action: Currency Factor Vs. Tax-Triggering Shareholder Return

Event-Driven

24 local brokerages cover Samsung Electronics. FnGuide tracks them, and the consensus now sits at a ₩37.01T full-year OP.










FnGuide consensus (₩B)
2020. 12. 14
T-1M
T-3M
T-6M
T-1Y


Sales
238,193.5
238,680.4
233,927.8
231,198.0
255,507.1


OP
37,013.8
37,207.4
32,862.2
32,261.0
37,529.6


NP to controlling stake
27,564.8
27,710.8
24,778.3
24,912.5
29,005.9


EPS (₩)
4,058
4,080
3,648
3,668
4,270


PER (x)
18.10
15.50
16.20
14.30
12.80


12M PER (x)
14.30
12.50
12.94
11.85
12.81


TP (₩)
81,967
76,400
72,592
65,000
61,477

Source: FnGuide

How Samsung would calculate FCF remains a secret. But the below widely-accepted formula shows that Samsung will likely be 10%p short of hitting the 3-yr 50% target.It will leave a ₩6.5T room to fill up. Assuming full allocation to special dividends, I expect a ₩950 special dividend for ord (₩951 for 1P).* The median FCF of the 24 local brokerages also falls on ₩6.8T.









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


FCF
28.9
14.1
27.6
70.7


1. OCF
91.1
62.3
79.7
233.1


1.1 After-tax OP
42.7
19.8
26.4
-


- OP
58.9
27.8
37.0
-


- 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
14.0
-


- Current assets
174.7
181.4
193.4
-


- Current liabilities
69.1
63.8
61.9
-


- NOWC
105.6
117.6
131.6
-


Dividends
9.6
9.6
9.6
28.9


- Dividends as a % of FCF
33.24%
68.00%
34.87%
40.83%


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%
34.87%
40.83%

Source: DART, SEIBro, &amp; FnGuide







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

FCF
70.7


: 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

Full-year div yield will be 3.22% for ord and 3.42% for 1P. Interim div-adjusted yield will sit at 1.78% for ord and 1.88% for 1P.





Special div-adjusted div yield (₩T)

Common DPS (incl. special div)
₩2,366


: Price
₩73,400


: Dividend yield
3.22%


1P DPS
₩2,368


: Price
₩69,300


: Dividend yield
3.42%

Source: DART, SEIBro, &amp; FnGuide







Special &amp; interim div-adjusted div yield

Common DPS (incl. special div)
₩1,304


: Price
₩73,400


: Dividend yield
1.78%


1P DPS (incl. special div)
₩1,306


: Price
₩69,300


: Dividend yield
1.88%

Source: DART, SEIBro, &amp; FnGuide



Samsung Electronics Pref Shares (005935 KS)

Samsung Electronics

Samsung Yr-End Special Dividend Update