Samsung Electronics shares fall after shareholder return announcement

Shares of Samsung Electronics fell 8% in early trading on Monday, after the South Korean chipmaker said last week its shareholder returns this year could reach up to 110 trillion won ($79.4 billion).

Rival chipmaker SK Hynix was up 0.4%. The benchmark KOSPI index fell 1.5%.

Samsung said on Friday that this year's shareholder returns would be over five times the size of the previous high of 20.3 trillion won in 2020, and that they would include 30 trillion won in cash dividends in the third quarter.

However, analysts said the projected returns were smaller than they had anticipated and that they had expected more details on the buyback plans.

"Unlike SK Hynix, Samsung Electronics did not mention the possibility of raising its existing shareholder return policy, nor did it announce a plan to cancel treasury shares that could more directly contribute to the stock price increase, which is disappointing," Sohn In-joon, an analyst at Eugene Securities, said in a report.

"However, it is expected that gradual additional shareholder return announcements will meet market expectations."

Samsung Electronics also said on Friday it has bought back shares worth 15 trillion won for employee stock bonuses. Its board will decide remaining payouts in January 2027, with cash dividends, share buybacks and share cancellations to be considered.

Under its 2024 to 2026 shareholder return policy, Samsung is committing 50% of free cash flow accumulated over the three years to shareholders.

Sanjeev Rana, head of research at CLSA Securities Korea, said the shareholder returns should "help set a floor for the share price," although he said some may have expected the entire package in one go.

"Also, from a share price perspective, a buyback would have been better as it would have created additional demand for shares in the market," he said.

SK Hynix said this week it will buy back and cancel 40 trillion won of treasury shares and allocate more than 50% of its free cash flow generated between 2025 and 2027 to boost shareholder returns.

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