The stock price of Samsung Electronics increased 1.36% and closed at 1.94 million won (US$1,640) per share on January 12. It reached a new high as it did a day ago.
Under the circumstances, fund managers’ opinions are split on an additional increase. Still, more than half of experts in the market are regarding it as being undervalued. “Samsung Electronics accounts for 22% of the South Korean stock market and this means it is a very safe asset,” said Park Heon-seon at Mirae Asset Global Investments, adding, “In addition, it is the only South Korean company that can earn 8 trillion won (US$6.8 billion) in a single quarter by manufacturing semiconductor chips and display panels.”
Korea Investment & Securities recently mentioned that the stock price can reach 2.2 million won (US$1,870) per share in the mid to long term if the company’s ROE and PBR increase. It remarked that both the ROE and PBR of Samsung Electronics are likely to go up this year although the recent increase in its stock price has been led by expectations for a new governance structure and the performance of the company.
As of September last year, Samsung Electronics recorded an ROE of 10.53%. According to some experts, the 12-month ROE estimate is expected to rise to 15% once the company’s operating profit breaks the 10 trillion won mark this year. “In that case, the PBR and stock price reach 180% and 2.2 million won (US$1,870),” Korea Investment & Securities explained, adding, “If the PBR hits a record high of 20%, the figures can amount to 220% and 2.7 million won (US$2,295), respectively.”