BlockBeats message: On August 20, according to the Korea Economic Daily, Samsung Electronics plans to announce this month a shareholder return plan with a scale of about 150 trillion won, exceeding the 100 trillion won figure reported earlier today by other media. It is expected to include measures such as share buybacks and cancellations and special cash dividends. The size may set a new high in the history of listed South Korean companies.

Insiders said Samsung Electronics plans to hold a board meeting this month to review the related shareholder return plan. Previously, the market expected the return size could be as high as 200 trillion won, but considering the company’s basic principle of using 50% of free cash flow (FCF) for shareholder returns, the final figure is expected to fall between 150 trillion and 160 trillion won.

Samsung Electronics executives said that as the memory chip industry recovers, the company’s cash-generating ability has improved significantly. They are studying various options to enhance shareholder value and will determine approaches that shareholders can actually feel as real returns, while complying with the shareholder-return principles.

The market believes that this large-scale shareholder return is mainly driven by improved performance brought about by a supercycle in memory semiconductors. Brokerages estimate that Samsung Electronics’ free cash flow for the full year this year will be about 263 trillion won, and that during the 2024-to-2026 shareholder return policy cycle, cumulative free cash flow is expected to be about 319 trillion won. Calculated using a 50% payout ratio, total return funds would be approximately 160 trillion won. After deducting the 39.1 trillion won already executed and planned for execution, the remaining funds are close to 120 trillion won.

Market expectations are that Samsung Electronics may use its remaining funds to add large-scale special dividends, on top of maintaining its regular dividend of 1,668 won per share per year. At the same time, the company may also pursue large-scale share buybacks and cancellations to ease market concerns that employee incentive programs could increase the number of shares in circulation, thereby enhancing shareholder value. Industry insiders say that following SK hynix, Samsung Electronics has also unveiled a large-scale shareholder return plan, which could become an important factor driving an increase in valuation levels in the Korean stock market.