Samsung Electronics plunges more than 7% intraday; the 1100 trillion won shareholder return plan falls short of expectations; JPMorgan’s assessment leaves investors disappointed

(Source: Financial News)
              Samsung Electronics’ share price fell by more than 7% at one point. The reason was that its new shareholder return plan focuses on dividends, disappointing investors.            
August 24, Samsung Electronics’ share price fell by more than 7% at one point. The reason was that its new shareholder return plan focuses on dividends, disappointing investors.
The market’s negative reaction stems from two factors: first, it only finalized a total cash dividend of about 300 trillion won for implementation in the third quarter, while the remaining 600–800 trillion won in capital-return measures was postponed until the board meeting in January next year; second, the actual announced ceiling was lower than the market’s rumor of 1500 trillion won.
Under the policy of using 50% of free cash flow (FCF) generated over the three years 2024–2026 for returning value to shareholders, Samsung’s board of directors proposes that the amount of funds remaining available for shareholder returns in 2026 will be approximately 90–110 trillion won. Excluding the total 29.3 trillion won in returns already completed in 2024–2025 (cash dividends of 20.9 trillion won and share repurchases with cancellation of 8.4 trillion won), this figure is calculated.
After the subsequent third-quarter cash dividends of 30 trillion won, there will still be up to 80 trillion won of funds awaiting disposition. The size of the share repurchase and cancellation to be determined by the board in January next year will become the next key variable affecting the stock price.
In a report, JPMorgan analyst Jay Kwon wrote that the specific items that disappointed the market included the amount committed in the third quarter, the lack of any announcement of a share repurchase plan, and the shareholder-return ratio staying unchanged at 50% of cumulative free cash flow. Kwon said, “It is still unclear why Samsung management chose dividends instead of buybacks, because we believe many investors would prefer repurchases, viewing them as a more effective way to return value.”