Profits that Samsung Electronics will return to its shareholders are expected to exceed 9 trillion won (US$7.74 billion) in 2017. If Samsung Group returns profits to shareholders through dividends and share buyback, Samsung Electronics, the number one company in terms of market capitalization, will have a great effect on other companies, helping ease the so-called Korea discount, or offshore investors' undervaluation of South Korean stocks.
Daishin Economic Research Institute forecasted on Dec. 2 that Samsung Electronics will return 9.19 trillion won (US$7.89 billion) of profits to its shareholder in 2017, including share repurchase and dividend expansion. The figure was obtained according to Samsung Group’s shareholder return plan. The group announced in October that it will buy and sell its own shares worth 11.3 trillion won (US$9.71 billion) by 2017 and use 30 to 50 percent of free cash flow to buy its shares. Also, the group said it will consider offering quarterly dividends from next year.
The amount of return profits will continuously grow every year. Samsung Electronics returned 4.13 trillion won (US$3.55 billion) to its shareholders last year, spending 3 trillion won (US$2.58 billion) on dividends and 2.13 trillion won (US$1.83 billion) on share repurchases. The figure will amount to 7.56 trillion won (US$6.5 billion) this year and 8.06 trillion won (US$6.93 billion) next year.
An official from Daishin Economic Research Institute said, “Samsung Electronics’ free cash flow ratio to cash dividend and share repurchase this year stands at 67.2 to 87.2 percent.” It is higher than the average of 732 listed securities firms at 59.7 percent and the average of top 30 business groups at 51.6 percent. When Samsung Electronics increases its shareholder returns every year, it will motivate the nation’s large business groups to offer dividends and repurchase their treasury stocks.