Better numbers, better dividends.
It is only natural for those who risked their money and invested in the companies that are about to show higher numbers to expect higher returns.
The local private sector, in general, had a profitable year in 2017. Shares reached record highs, reflecting positive earnings outlooks. Record dividends are expected as companies disclose their fourth quarter and annual 2017 results in early 2018.
Samsung C and T, the listed construction and trading arm of Samsung Group, announced its plan recently to increase dividend payouts by almost four times what it paid in 2016.
It will pay 2,000 won per share over the next two years, up from 550 won per share in 2016.
Besides upholding a shareholder-friendly policy, Samsung C and T will see a significant amount of cash coming in from other Samsung affiliates it has stakes in.
This would further boost its cash flow as it receives higher dividends from Samsung Electronics and Samsung Life Insurance amid record results.
Also, Samsung BioLogics will soon begin to see positive earnings from its core operations.
Based on these expectations, analysts and Samsung C and T said it came out with a "surprising" dividend policy.
"Our dividend policy is aligned with other Samsung companies' shareholder-friendly ones," a Samsung C and T spokesperson said.
There will be more money coming in for Samsung C and T as it moves to sell its 20.05 percent stake in Hanwha General Chemical.
"Samsung C and T was able to reach this big dividend decision because it expects a positive shift in its cash flow," said Yoon Tae-ho, an analyst at Korea Investment and Securities.
Samsung C and T has a 19.34 percent stake in Samsung Life, and a 4.61 percent in Samsung Electronics. The construction company holds a 43.44 percent stake in Samsung BioLogics.
It has had a positive cash flow from its operations as of September last year. It also had a positive cash flow from its investment activities as Samsung C and T had more cash coming in from asset liquidation than cash spent on investments in tangible and intangible assets.
Samsung C and T spent nearly 250 billion won investing in "related companies," according to its financial statement. It invested 36 billion won over the same period a year ago.
Most of the capital may have been injected into BioLogics, a biosimilar company. Samsung C and T had to pay its long-term debt, which resulted in a negative cash flow from financing.
KT and G, a local tobacco giant, has disclosed it is considering increasing dividends by 200 won to 3,800 won per share for fiscal 2017.
Its dividend policy will be drawn up following the announcement of its annual 2017 results in early 2018.
Like Samsung C and T's shareholders, including Samsung Electronics Vice Chairman Lee Jae-yong, KT and G's investors will see higher returns, despite a slowdown in cigarette sales amid a nationwide no-smoking campaign and changing demographics.
KT and G's key shareholders include the National Pension Service (NPS) and the Industrial Bank of Korea.
The NPS also has a significant stake in Samsung C and T.
Even with the slowdown, it has managed to keep a positive cash flow from its operations as of the third quarter of last year.
The company has always maintained a high dividend policy, even though its conventional cigarettes are no longer considered a growth business.
A KT and G spokesperson said, "Its recently released e-cigarettes, however, have given it an alternative boost."
The company's fourth-quarter earnings will likely perform below the market consensus, according to Park Ae-ran, an analyst at KB Securities.
"The local e-cigarette market has been growing faster than Japan, and Philip Morris' iQOS looks to lead here. The fast market growth will spur KT and G sales," Park said.
S-Oil is also considering increasing dividends as the refinery industry had a stellar growth on the back of increasing oil prices in 2017.
Like KT and G, it will disclose its dividend policy at the time of its annual earnings report.
S-Oil CEO Othman Al-Ghamdi has increased his stake in the foreign-invested oil company from 1,159 shares to 2,219 shares, according to S-Oil's disclosure.
This reflects his assurance and strong confidence in the business ahead, the company said.
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|Publication:||The Korea Times News (Seoul, Korea)|
|Date:||Jan 10, 2018|
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