Samsung announces stock split, expects semiconductors demand to stay strong

Samsung Electronics announced Wednesday its first stock split and said it expects demand for semiconductors to remain strong in 2018, as it posted record annual profit driven by a so-called memory chip “super-cycle.”

 

The tech giant’s stock split is the latest in a series of moves to bolster shareholder returns, including 5.8 trillion won ($5.4 billion) in annual dividends and 9.2 trillion won in share buybacks and cancellations in 2017.

 

The firm’s largesse has encouraged investors to hold shares despite concerns that the memory business may be peaking. The stock split will open the door to retail investors as well, boosting liquidity and underpinning valuations, analysts said.

 

“The stock split comes as a surprise to me,” said Kim Sung-soo, a fund manager at LS Asset Management who holds Samsung shares, noting that Samsung previously had shrugged off investors’ calls to split its shares. “This will not have an impact on the company’s fundamentals, but it will increase supply of the stock and have a positive impact on shares.” Led by a stellar fourth quarter, the global leader in televisions, memory chips and smartphones brought home an annual operating profit of 53.7 trillion won ($50.2 billion) in 2017, outstripping the previous record of 36.8 trillion won in 2013.

 

While the profit was expected, the firm’s shares surged more than 8 percent after it unveiled the stock split. They closed up 0.2 per cent. In further good news for shareholders, Samsung eased concerns that the huge expansion in the global semiconductor business may be tapering off, saying the outlook for 2018 remained strong.