Activist investors pile more pressure on Samsung C&T

Activist investors once again called upon Samsung C&T to bump up dividend payouts and buy back its stocks to address the construction and fashion company's “inadequate capital allocation approach and steep discount to its net asset value.”

Samsung C&T headquarters in Gangdong District, eastern Seoul in 2019 [NEWS1]

Activist investors once again called upon Samsung C&T to bump up dividend payouts and buy back its stocks to address the construction and fashion company's “inadequate capital allocation approach and steep discount to its net asset value.”

Such proposals were included in a letter released on Friday by Samsung C&T shareholders — including ANDA Asset Management, City of London Investment Management and Whitebox Advisors — collectively representing over 1 percent of its shares, according to the firms.

The joint letter follows a set of similar demands made in December respectively by White Advisors, Palliser Capital and City of London Investment Management, which requested that the company address its trading discounts.

The latest proposals were submitted on Nov. 7 for consideration at Samsung C&T’s annual general shareholders’ meeting slated for March, according to the investors.

Under the joint statement, the investors suggested that Samsung C&T’s “share price has declined significantly since the 2015 Cheil Industries” merger. The investor group argued that the company’s total shareholder returns — which include capital gains and dividends — have declined 23 percent as of Nov. 6, the day before the proposal’s submission.

“In early 2023, [Samsung C&T] announced a ‘new’ shareholder return policy for FY [fiscal year] 2023-2025 that is largely unchanged from the preceding three-year period,” said the letter, adding that “this view is shared by a significant portion of the shareholder base, based on our engagement with other local and foreign minority shareholders.”

The activist investors urged the company to adopt “a transparent, shareholder-friendly capital allocation framework,” putting forward two suggestions to boost the underperforming stock prices: increasing dividend to 4,500 won ($3.40) per common share and 4,550 won per preferred share for 2023, up from the 2,550 won and 2,600 won announced by Samsung C&T, which the company suggested as the highest payout ratio within its dividend policy, alongside allotting 500 billion won for a stock repurchase program.

Samsung C&T on Wednesday posted a 6.84 percent on-year growth in net profit to 2.72 trillion won for 2023, and annual revenue of 41.9 trillion won, down 2.93 percent on year. Operating profit rose 13.51 percent to 2.87 trillion won. It plans to cancel one-third of its common treasury stocks and all of its preferred shares, which according to the company is valued at over 1 trillion won.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]