KB says Samsung gloom has peaked after a steep slide

KB Securities told clients on Nov 9 that gloom around Samsung Electronics has reached its peak, according to Maeil Business Newspaper and Seoul Economic Daily. Both outlets reported that the broker said a rebound in the shares was worth watching for.

The note lands after one of the stock’s harshest stretches this year. Samsung ended the Nov 6 session at 188,700 won (US$139.10), 6.35% below its Nov 5 close. The KOSPI, Korea’s main stock index, lost 6.02% the same day.

KB leans on Samsung’s history of recoveries

KB went back through earlier episodes in which Samsung shares had dropped 40%. In more than 97% of those cases the stock was higher within 60 days, Seoul Economic Daily reported. Seoul Economic Daily also said KB framed the current slump as a chance for investors to add shares. That is the broker’s own reading of the record.

The current drop is not that deep. Samsung shed 27.98% over the 20 sessions to Nov 6 and 32.37% over 120 sessions. KB’s figures describe what happened after earlier falls of a different size. They say nothing certain about this one.

⤢

Record profit, falling shares

The slide came right after Samsung reported strong results. Its preliminary consolidated figures for the third quarter, filed on Oct 29, showed operating profit of 107.44 trillion won on revenue of 195.25 trillion won. A preliminary figure is the company’s early estimate, ahead of its full quarterly report. Operating profit grew 20.06% from the second quarter and 783.11% from a year earlier. It was the highest in at least six quarters.

The stock had climbed into those results. On Oct 28, the eve of the earnings call, Samsung jumped 9.01% to close at 242,000 won. Eight sessions later it stood at 188,700 won. Over the final five sessions to Nov 6 alone it lost 16.13%.

That gap between earnings and share price is why KB’s note matters to holders abroad. Neither outlet gave a reason for the slide tied to Samsung’s own business.

A market-wide retreat, and a weaker won

Nov 6 was a bad day across Korea. The KOSPI closed at 5,059.69. Foreign investors were net sellers of 2.6268 trillion won (about US$1.94 billion) of KOSPI shares that day. That figure covers all stocks on the market, not Samsung alone. Pacific Tape has explained how foreign flows move the KOSPI.

Samsung is bound tightly to the index. It made up 28.68% of the KOSPI 200’s total market value on Nov 6, with a market value of about 1,103 trillion won. A large move in the market and a large move in Samsung therefore tend to show up together. The figures alone do not show which one led.

For investors who count in dollars, the losses were larger. From Oct 20 to Nov 6, Samsung fell 10.78% in won but 12.65% in US dollars. Over the same span the won weakened from 1,328.1 to 1,356.6 per dollar, a 2.15% move.

Repurchase window closes Nov 21, dividend paid Nov 27

Samsung’s share repurchase period ends on Nov 21. The program, which began on Aug 24, covers 53,285,968 common shares worth about 15 trillion won, acquired for employee stock compensation. Samsung will then pay a quarterly dividend of 4,601 won per share on Nov 27 to holders of record on Sept 30.

---

Information only, not investment advice.