Samsung Electronics 'face value split card', why now?

Samsung Electronics 'face value split card', why now?

Why is it now?

Samsung Electronics' surprise face splitting card shakes business and securities.

The face value of Samsung Electronics shares is a scenario that has long been anticipated.

Every time Samsung Electronics shares are split up, the company has come up with the idea that it is not true.

At the end of March last year, former vice chairman Kwon Oh-hyeon said at the 28th regular general shareholders' meeting held at the Seocho office, "The par value division is not very helpful in enhancing shareholder value."

Samsung Electronics, which has denied the dividing-line dividend decision, decided to divide its 50-to-1 share price for the purpose of raising shareholder value recently before Lee Jae-Yong's second trial.

The unexpected point of view of Carda la market was very hot.

However, despite the unexpected resurgence, the share price of Samsung Electronics is still in the ranks of the end.

◆ AMOREPACIFIC is looking for a split case Effect 'Well'

Samsung Electronics announced on October 31 dividing its face value per share from 5,000 won to 100 won.

As a result, the total number of issued shares has increased from 648,192,447 thousand shares to 128,384,694 shares of common stock, and the share price of Samsung Electronics, which is currently around 2.5 million won, will be reduced to 50,000 won.

Immediately after the announcement, the stock market responded sensitively.

The share price of Samsung Electronics, which had been showing a steady decline, fell more than 8% during the day.

In the meantime, Samsung's stock price per share has been so high that it has been constantly raised that it is a burden for individual investors to buy.

With this par-split, more investors will have the opportunity to hold Samsung Electronics shares, which is expected to boost transaction volume and boost share prices.

However, if we look at past cases, par value division does not guarantee continued share price rises.

In 2015, AMOREPACIFIC cut the face value of 5,000 to 500 won. The company has lowered its stake in the company from W3.8 million to W380,000.

Immediately after the stock split, the trading volume exploded and stocks reacted immediately.

Amorepacific stocks soared to 450,000 won in two months.

However, the share price of Amorepacific, which stood at 450,000 won, began to slip gradually.

Amorepacific's sales in the Chinese market have plunged due to the retaliation of China's Sado (Gogo missile defense system).

Currently, AMOREPACIFIC shares are worth W300,000.

SK Telecom, which had previously split the face in 2000, showed a similar pattern.

The company cut its par value from 5,000 won to 500 won to 290,000 won, down to 290,000.

SK Telecom shares also surged to W370,000 in two months due to the split. However, this trend did not last long.

SK Telecom's current share price is W260,000.

"After analyzing 667 cases of par value split since 2000, the average share price has risen since the announcement of par value, but it has dropped again." On average, on the day of announcement, it rose 3.78% The stock price has fallen back and forth. "

In the short term, par value split can lead to a positive share price reaction, but in the long run, it will not boost share prices.

The division of the face does not change the intrinsic value of the company.

The stock price of Samsung Electronics has been weakened as foreign investors and institutions have surrendered their stocks as if the individual investors have soared due to the announcement of the split.

At the beginning of the day, it rises at the beginning.

◆ Subtle presentation point ... Purpose of defense (?)

In the business world, it is pointed out that the timing of the announcement of SEC's subdivision is subtle.

On the 5th, Lee Jae-yong voiced his surprise announcement ahead of the trial for the second sentence.

According to financial circles, Samsung Electronics' decision to split the par value was based on Lee Jae-yong's "decision to go to bed".

At the end of last year, he was led by Chung Hyun-ho, President of the Business Support Task Force (TF), who was given the role of actual control tower from the vice chairman.

The vice-chairman reportedly reported the details of his arrest and received his final approval.

However, considering that expansions of shareholders will increase exponentially, Samsung Securities' split-up will not help much in strengthening its governance structure.

As management intervention increases, the range of fate becomes narrower.

Also, if the stock price rises after the liquidation, it is highly likely that the succession cost will increase.

Still, why did Samsung Electronics decide to split the face value?

It is interpreted that it is trying to secure 'as a friend' by attracting general investors to become 'national stock' by dropping the 'Emperor' position by first dividing the face value.

At the same time, there is an analysis that it is a pessimism to defend management rights from institutional investors such as the National Pension.

The National Pension, which owns 9.2% of Samsung Electronics shares, voiced a loud voice about big issues such as executives and mergers and acquisitions at shareholders' meetings.

It is the interpretation that Samsung Electronics is a strategy to defend management intervention of institutional investors such as National Pension by increasing share of friendly minority shareholders who receive high dividend by dividing stocks.

This is in line with the fact that private investors are buying large stocks of Samsung Electronics invested by foreign institutions shortly after the announcement of the split.

At the same time, Samsung Electronics cautioned on expanding interpretation.

Samsung Electronics said, "More people are buying shares of Samsung Electronics to increase their liquidity and increase shareholder return policy." Paragraph dividing is a succession of management rights And it is not easy to link it to the vice-chairperson's trial. "

On the other hand, Samsung Electronics plans to propose an issue related to split of par value at the general shareholders' meeting on March 23.

If the agenda is passed, Samsung Electronics' new stock certificate, divided into 50ths, will be held on May 16th.