Samsung (Preferred Stock – Korea: 005935) is a megacap technology company that trades at a steep discount to any of its global peers. At current prices the preferred, which in Korea is like a non-voting common, sells for less than the value of its semiconductor business plus net cash + investments. In total, Samsung has leadership positions in Mobile, Semiconductor, Display, and Consumer Electronics businesses and should generate more than $190 billion in sales in 2014 and $22 billion in operating income. Samsung has made significant investments in foundry and display, which offer potentially significant upside if successful. After accumulating significant excess cash on the balance sheet over the last few years, the company recently announced a share repurchase and potential dividend increase, which could boost interest in the shares. The company is also undergoing a transition in leadership which could help increase the value of the shares. The preferred trades for slightly more than 3 x 2014 EV/EBIT, which is an extraordinary discount to global peers.
Stephen Yacktman and Jason Subotky on Samsung Preferreds
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