Thanks to the government’s Value-Up program, high-dividend and low price-to-book ratio (PBR) stocks are garnering attention. However, some large-cap stocks are still sticking to their non-dividend policies, leading to increasing discontent among shareholders.
According to the Korea Exchange on March 19, LG Energy Solution decided not to pay dividends for the past fiscal year. Similarly, Samsung Biologics also decided not to pay dividends for the past fiscal year.
Among the total of 2,440 companies listed on the KOSPI and KOSDAQ, 1,058 companies disclosed dividend announcements for the past fiscal year. LG Energy Solution and Samsung Biologics have the largest market capitalization among the 1,382 companies with no dividends. LG Energy Solution’s market capitalization stands at 94.65 trillion won (US$70.66 billion), while Samsung Biologics’ is 60.35 trillion won. The two companies rank third and fourth, respectively, in terms of market capitalization on the KOSPI.
Given that most large-cap companies listed on the KOSPI have settled into stable growth trajectories, the majority of them pay dividends. However, only LG Energy Solution and Samsung Biologics do not pay dividends within the top 20 companies by market capitalization on the KOSPI. Following these two companies, the next largest non-dividend-paying listed company by market capitalization is the Korea Electric Power Corporation (KEPCO), ranked 23rd in terms of market capitalization.
KEPCO recorded a net loss of 4.72 trillion won last year and incurred a deficit of 24.43 trillion won in 2022, the largest in the history of the domestic stock market. However, considering the financial performance of LG Energy Solution and Samsung Biologics, shareholders may find it puzzling that they do not pay dividends as they have sufficient dividend-paying capacity.
LG Energy Solution recorded a net loss of 451.8 billion won in its first year of establishment in 2020. However, it reported a net profit of 929.9 billion won in 2021, followed by 779.8 billion won in 2022. Last year, it achieved a net profit of 1.64 trillion won. Similarly, Samsung Biologics, which has never paid dividends since its establishment in 2011, has consistently been profitable since 2018. It recorded a net profit of 857.7 billion won last year. As of the end of last year, LG Energy Solution had accumulated retained earnings of 2.36 trillion won, while Samsung Biologics had retained earnings of 4.03 trillion won.