Samsung C&T emerges as key lever in group’s restructuring

By Korea Herald

Company’s stock prices soar 25% in past month

  • Published : Jun 8, 2014 - 21:17
  • Updated : Jun 8, 2014 - 21:17
As Samsung Group’s equity restructuring picks up speed, its construction and trade affiliate Samsung C&T has risen as the key pivot point in the group’s intricate cross-shareholding network.

Over the past month, Samsung C&T’s stocks soared by 25.1 percent, from 63,000 won ($61.60) on May 7 to 78,800 won on June 5, market research firm FnGuide said Sunday.

The sharp appreciation was triggered by the announcement that the group’s de facto holding company Samsung Everland and information solutions unit Samsung SDS, both in which Samsung C&T holds considerable shares, would go public within the year.
A man walks past a Samsung logo displayed at the group’s Seocho office building in Seoul. (Bloomberg0

As of the end of March, Samsung C&T held shares in most of the group’s key affiliates ― 4.1 percent in Samsung Electronics, 17.1 percent in Samsung SDS, 7.8 percent in Samsung Engineering and 1.5 percent in Samsung Everland.

It thus plays a crucial role in the group’s cross-shareholding ring structure, and is also considered a strategic control panel for bedridden group chairman Lee Kun-hee and his children to maintain leverage over the entire group.

“It is yet uncertain how Samsung Group will reshape its management structure,” said Lee Seon-il, a researcher at IM Investment & Securities.

“But what is for sure is that the equity restructuring issue will always inflict positive effects upon Samsung C&T, which holds a handful of shares in most of the key affiliates.”

Samsung C&T so far remains reserved over its stance, but speculations are rising that it will soon restructure its business portfolio.

The most plausible and persistent scenario is that the company may merge with Samsung Engineering, then absorb the construction sectors of Samsung Heavy Industries and Samsung Everland, to form an unrivaled construction giant.

This was backed by the fact that Samsung C&T last year became Samsung Engineering’s second-largest shareholder, with 7.8 percent of the total shares.

The expectations for Samsung Group’s restructuring also boosted stock prices for display panel and battery manufacturer Samsung SDI (13.5 percent) and chemicals and materials manufacturer Cheil Industries (13.6 percent).

The two companies are slated to merge this month to create a comprehensive materials and energy solutions company, with total assets amounting to 10.9 trillion won.

Samsung Electronics, the group’s signature unit and cash cow, also upped its stock price by 8.4 percent over the past month.

“Samsung Electronics’ net cash assets will amount to 67 trillion won by the end of the year,” said Kim Ji-woong, researcher at E-Trade Financial.

With the dividend amount expected to jump to 80,000 won per share or more, the company’s stocks are likely to continue their uptrend, Kim added.

Some experts, however, expressed concerns over Samsung’s go-go stocks, claiming that their value appreciation was more attributable to the yet-unfounded expectations for the management restructuring, rather than their actual performances.

Such a prudent stance was observed in SK Securities, Daishin Securities and Shinhan Investment, all of which excluded Samsung C&T, Samsung SDI and Cheil Industries from this week’s investment recommendation list.

By Bae Hyun-jung (