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Samsung Electronics' share target price revised up on hope over dividends

2017/11/11 09:00

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SEOUL, Nov. 11 (Yonhap) -- South Korean brokerage houses are revising up the target share price for market kingpin Samsung Electronics Co. as the company continues to make friendly gestures towards shareholders, market watchers said Saturday.

Shares of Samsung Electronics closed at 2,820,000 won (US$2,523) on Friday, up 0.11 percent from the previous session. The price marks a 56.2 percent surge from 1,805,000 won posted in the first trading session of 2017.

According to the data compiled by Yonhap Infomax, the financial arm of Yonhap News Agency, local brokerage houses are currently forecasting an average target price of 3.32 million won, with Yuanta Securities Co. even suggesting 3.8 million won. The average target price set in July was around 2.89 million won.

"The earnings are getting better, with returns to shareholders also improving," said Lee Seung-woo, a researcher from Eugene Investment & Securities Co. in a report released this month that recommended a target price of 3.5 million won. "There's no reason not to hold on to the company's shares."

   Last month, Samsung Electronics said it was planning to allocate 9.6 trillion won for dividends next year and maintain the amount for 2019 and 2020 as well. The combined dividend figure for this year is estimated at 4.8 trillion won, up 20 percent from last year.

The rising returns to shareholders come as Samsung has been posting record-breaking quarterly performances, helped by the industrywide boom of chips.

The tech giant said it raked in a whopping 14.53 trillion won in operating profit in the third quarter, which marks a sharp rise from 5.2 trillion won posted a year earlier. The crucial chip business accounted for 9.96 trillion won.

The company also decided to start to buy back and retire 712,000 common shares and 178,000 preferred shares over the next three months.

Park Yu-ak, a researcher from Kiwoom Securities Co., said the fall in the number of shares circulated in the market following the buy-back programs is expected to increase dividends per share down the road.

Kiwoom Securities, which also revised up its target price to 3.5 million won from the previous 3.1 million won, said the dividend per share may reach up to 75,000 won by 2020, compared to 37,000 won expected for this year.

The reshuffle of Samsung's management, which tapped younger leaders for the chip, mobile, and consumer electronics divisions, also bolstered the outlook for Samsung Electronics, market watchers said. Compared to the previous leaders, who were all in their 60s, the new heads are all in their 50s.

colin@yna.co.kr

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