Samsung Group market cap shrinks to 2022 levels

(Kim Ho-young)

Samsung Group shares, which account for the largest share of the Kospi in market capitalization, have shrunk to 2022 levels, when rumors of a ‘40,000-won crisis’ persisted.

According to the Korea Exchange, Samsung Group stocks accounted for 27 percent of Kospi’s total market cap as of Sunday, down 3.97 percentage points from 30.97 percent at the beginning of 2024. This is a significant drop from the over 36 percent peak during the Covid-19 pandemic in March 2020, and is even lower than the 27.44 percent recorded in September 2022 when Samsung Electronics shares dipped to the low 50,000-won range.

The sharp decline in Samsung Group’s market cap is notable when compared to the overall market. While Kospi’s total market cap has only decreased by 1.37 percent in 2024 from 2,126.37 trillion won ($1,578 billion) to 2,097.29 trillion won, Samsung Group’s market cap plummeted by 13.84 percent from 657.2 trillion won to 566.24 trillion won.

Much of this decline can be attributed to the 22.8 percent drop in Samsung Electronics shares, Samsung Group’s largest constituent by market cap. Although Samsung Biologics, the group’s second-largest stock, has gained 31.45 percent in the year to date, it was not enough to offset the losses from Samsung Electronics.

All eyes are now on Samsung Electronics’ upcoming third-quarter earnings report, scheduled for October 8th, 2024, with market analysts divided on whether the results will help stabilize the stock. NH Investment & Securities analyst Kim Young-hwan warned that “the demand for DRAM, excluding high-bandwidth memory (HBM), and the average selling price (ASP) might fall short of market expectations, leading to potentially disappointing results.”

However, other analysts see a chance for a technical rebound. Samsung Electronics’ price-to-book ratio (PBR) for the next 12 months stood at 1.0 at the close of trading on October 4th, a level that was not seen even during the 2008 financial crisis. Daishin Securities analyst Lee Kyung-min emphasized that “whether Samsung Electronics’ operating profit exceeds 10 trillion won in the third quarter of 2024 is crucial.” He also noted that given the historically low valuation of South Korean semiconductors, the sector could be on the verge of a rebound.

While expectations for Samsung Electronics remain subdued, optimism surrounding Samsung Biologics is growing. Three securities firms raised their target prices for Samsung Biologics by up to 20 percent On October 4th, with KB Securities setting the highest target at 1.26 million won. Samsung Biologics’ stock closed at 999,000 won that day, just shy of the 1 million won mark. KB Securities pointed to growing inquiries related to contract development research in anticipation of the U.S. Biosecure Act being enacted later in the year, citing it as a key driver of the company’s long-term growth potential.