Samsung Corp.'s Buried Value Lures Investors From Abroad
Foreign investors are on the prowl in South Korea, looking for companies that they feel have good assets but untapped value. Their plan: Buy the shares at attractive levels, prod management to do better and hope the prices soar. Their latest target: Samsung Corp.
Effectively a holding company for Korea's largest family-controlled conglomerate, Samsung Corp. is the country's third-largest construction contractor and a major trading firm. But those core businesses, which have been poor performers lately, aren't the major attractions for investors. Instead, they are drawn to the valuable stakes it holds in an array of other Samsung group companies.
The crown jewel is Samsung Corp.'s 3.9% stake in popular Samsung Electronics, maker of cellphones, flat-screen TVs and semiconductors. That stake alone is valued at some 3.3 trillion won ($2.9 billion), compared with Samsung Corp.'s own market capitalization of just 2.1 trillion won.
Samsung Corp. has holdings in 13 other listed companies, including a 12.6% stake in advertising giant Cheil Communications and a 3.9% stake in electronic-parts maker Samsung Techwin, as well as holdings in 10 unlisted units of the Samsung group.
Some foreign investors are angling to make Samsung Corp. sell parts of its treasure trove of assets, which would unlock value for shareholders and let Samsung Corp. concentrate on construction.
But succeeding won't be easy. Though the powerful founding family of Samsung, led by Lee Kun Hee, owns only 1.4% of Samsung Corp., the company and its holdings are a key lever by which the family controls the 64 companies forming the Samsung conglomerate.
Still, in cases where a founding family doesn't hold a big stake in a company whose shares are attractively priced, "its value is going to be unlocked -- it's just a question of when," says Robert Clements, director of emerging markets at Hermes Investment Management, a London-based pension-fund manager. In early March, his fund emerged as the largest foreign shareholder of Samsung Corp., with a 5% stake.
"If you were to break up this company, sell off everything but the construction business, you could extract a lot of value," Mr. Clements says.
Foreign fund managers have been encouraged by recent bouts of shareholder activism in Korea, such as a high-profile battle that pitted global shareholders against management at SK Corp., the country's largest oil refiner. Though foreign investors were thwarted in their effort to unseat SK Corp.'s chairman, they were able to wring some concessions in corporate governance and transparency. Already, companies such as steel-producer Posco, Hyundai Motor, SK Telecom and Samsung Electronics are responding to investor demands to buy back shares, boost dividends and, in some cases, alter voting rules to give minority shareholders more of a voice.
Much of the pressure for change is from foreigners, who have become vocal players in Seoul's stock market. Foreign investors, who own 57% of Samsung Electronics, now control 43% of Samsung Corp., compared with about 22% two years ago.
Belief that there's hefty value to be unlocked -- especially from the stake in Samsung Electronics -- is pushing up Samsung Corp.'s share price. So far this year, it has surged nearly 40%, outperforming the broader market index and topping the 27% gain by Samsung Electronics.
Samsung Corp.'s core businesses remained lackluster in 2003, with operating profit margins that were significantly lower than those of its competitors. Its balance sheet is also weighed down by one trillion won in debt.
Still, its stock trades at a premium, with the price at 21.9 times 2004 estimated earnings. That compares with a ratio of about five times for LG Construction and 6.5 times for Daewoo International, a general trading company. But on the basis of its price-to-book value ratio, which compares a company's stock-market value with its book value, Samsung Corp. looks inexpensive at just 0.5 times.
"On a pure earnings basis, Samsung Corp. is not attractive," says Brad Aham, fund manager at State Street Global Advisors in Hong Kong, whose fund is a shareholder of both Samsung Corp. and Samsung Electronics. "It's the book value, not the earnings, that investors are after." Mr. Aham and others realize that it will be difficult to force the company to loosen its grip on its securities holdings. However, he believes that in time investors will see some improvements in corporate governance that will boost the share price.
Samsung Corp.'s "excessive holding of securities is inefficient," wrote Sun-il Lee, an analyst at Dongwon Securities, in a recent report, adding that the company "could get higher returns investing elsewhere."
Kang Hyung Kyu, general manager of Samsung Corp.'s investor-relations department, says if the company had sold its Samsung Electronics shares a few years ago when some investors were calling for it, Samsung Corp. would have left a lot of money on the table because shares of Samsung Electronics have climbed steadily. Mr. Kang also contends that Samsung Corp.'s holdings in its affiliates give it a strategic edge in its business dealings.
The Center for Good Corporate Governance, a Seoul business watchdog, noted in a recent report that Samsung Corp. will be extremely reluctant to sell its stakes in other group units. The report also said it's unlikely that any other group company could afford to buy the holding company's stake in Samsung Electronics.
Aside from selling some assets, investors such as Hermes are calling for Samsung Corp. to buy back some 4.6 million shares of preferred stock, which carries no voting rights and dilutes dividends for other shareholders.
Some investors are worried that Samsung Corp., like Samsung Electronics, will decide to contribute to a bailout of Samsung Card, a troubled affiliate of the Samsung group. So far, Samsung Corp. hasn't taken any role in that bailout.
三星公司潜在价值诱人
海外投资者在韩国市场上四处寻觅，搜寻那些他们认为拥有优质置产、同时价值尚未被充分发掘的公司。他们的计划是：在合适的价位买进此类股票，然后鼓励公司管理层做得更出色，以期股价直线上升。三星公司(Samsung Corp.)成了他们的最新目标。
实际上，三星公司是韩国最大的家族企业集团的控股公司，它还是韩国第三大建筑承包商和重要的贸易公司。
不过该公司的这些核心业务近期表现欠佳，当然不会产生很大的吸引力。相反，投资者看中的是它所持的三星企业集团内各类关联公司的股权。
最吸引人的莫过于它拥有的知名企业三星电子(Samsung Electronics Co. Ltd.)的3.9%股权，后者主要生产手机、平板电视以及半导体产品。仅这些股权就价值3.3万亿韩圆（合29亿美元）左右，而三星公司自身的市值只有2.1万亿韩圆。
三星公司还持有其他13家上市公司的股权，其中包括广告巨擘Cheil Communications 12.6%的股权、电子元件生产商Samsung Techwin 3.9%的股权。该公司还持有集团内另10家非上市公司的股权。
当前，一些外国投资者正想方设法让三星公司出售手中的部分"宝藏"，因为这样一来就能为股东带来一些价值，并使公司将主要精力集中在建筑业务上。
但想要成功可不容易。虽然以李健熙(Lee Kun Hee)为首的公司创始人李氏家族只持有三星公司1.4%的股权，但该公司以及所持其他公司的股权却是这个家族控制这个庞大集团内总共64家公司的重要工具。
不过，伦敦的养老基金管理公司Hermes Investment Management的新兴市场主管罗伯特?克莱门斯(Robert Clements)指出，在创始人家族不是公司大股东、而且公司股价又具吸引力情况下，该公司的价值迟早将会被释放出来──这只是时间问题。在今年3月上旬，该基金成了三星公司最大的海外股东，持有后者5%的股权。
克莱门斯说，如果使三星公司瘦身，让它抛售手中除建筑业务以外的所有资产，那这将释放出巨大的价值。
近期，韩国企业的股东发起的一些激进活动让海外基金备受鼓舞，例如备受关注的全球股东反对韩国最大炼油公司鲜京集团(SK Group, SKG.YY)管理层的争端。虽然外国投资者让鲜京集团董事长下台的努力遭遇挫败，但投资者还是获得了管理层在改善公司治理和提高透明度方面的一些让步。此外，包括浦项综合制铁公司(Posco)、现代汽车公司(Hyundai Motor)、鲜京电讯(SK Telecom)以及三星电子等企业都对投资者有关回购股票、提高股息，以及在某些情况下修改投票规定以使小股东获得更多发言权的要求作出了回应。
其中不少要求企业进行变革的压力来自海外投资者，因为他们已成为韩国股票市场上勇于发表言论的群体。这些投资者目前所持的三星电子和三星公司的股权分别达到57%和43%，而两年前他们持有的三星公司股权仅约为22%。
投资者对于三星公司有巨大价值（特别是所持三星电子的股份）等待发掘的信念正在推动该股股价上涨。今年到目前为止，三星公司的股价已猛涨了近40%，超过了同期韩国综合指数的涨幅以及三星电子27%的涨幅。
去年，三星公司的核心业务依然黯淡无光，经营利润率远远低于竞争对手。该公司的资产负债表也受到1万亿韩国债务的严重拖累。
但它的股价依然坚挺，目前股价为2004年预期收益的21.9倍，而LG Construction和贸易公司Daewoo International的预期本益比分别为5倍和6.5倍左右。不过，从股价与帐面价值比来看（即公司的股票价格与其帐面价值之比），三星公司的股价似乎不贵──该比率为0.5。
作为三星公司和三星电子的股东，道富环球投资管理有限公司(State Street Global Advisors Ltd.)驻香港的基金经理布拉德?埃姆(Brad Aham)指出，如果纯粹从收益角度看，三星公司并没有吸引力。投资者看中的是帐面价值，而非收益。埃姆等投资经理意识到，要迫使三星公司放弃对关联公司的持股很难。不过，埃姆相信，投资者今后一定会看到三星在公司治理方面有所改进，这将提振其股价。
Dongwon Securities的分析师Sun-il Lee在近期的一份报告中指出，持有集团内其他公司太多股权使三星效率低下，该公司本来可以将这部分资金投到其他领域并获得更高回报。
三星公司投资者关系部的总经理Kang Hyung Kyu说，如果公司在几年前应投资者的要求而出售三星电子的股权，那么公司现在可就损失惨重了，因为三星电子的股价一直稳步上扬。Kang还表示，三星公司持有关联公司的股权使其在经营中拥有战略优势。
作为汉城的一家商业监督机构，Center for Good Corporate Governance在近期的报告中称，三星公司非常不情愿出售手中其他集团子公司的股权。该报告还指出，三星集团内的任何子公司都不太可能买得起三星公司所持的三星电子的股权。
除了出售部分资产外，Hermes Investment Management等投资者还呼吁三星公司回购约460万股优先股，这些股票没有投票权，但享有股息。
一些投资者担心，三星公司会像三星电子一样对Samsung Card伸出援手，挽救这家深陷困境的关联公司。迄今为止，三星公司尚未采取具体行动。
