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Samsung shares could gain as much as 50%: Barron's

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Shares of Samsung Electronics appear cheap and could gain as much as 50 per cent, Barron's financial newspaper said in its latest edition. - PHOTO: AFP

[NEW YORK] Shares of Samsung Electronics appear cheap and could gain as much as 50 per cent, Barron's financial newspaper said in its latest edition.

Samsung's stock has fallen 19 per cent this year due to plunging profits in its mobile phone business and it hit a 52-week low on Friday after a warning about its third-quarter profit earlier in the week.

But there appears to be little downside to owning a piece of the world's largest maker of handsets, as its memory chip business could generate an operating profit of US$10 billion next year, compared with US$8 billion this year, Barron's said in its Oct 13 issue. Net cash and investments now equal 40 per cent of Samsung's market value, it added.

The company is valued at 50 per cent of its annual sales based on its enterprise value - equity market value less net cash and investments. Apple Inc, by comparison, is valued at 2.5 times its sales, the newspaper said. "The Samsung story may require some investor patience. Yet the shares look promising, given the company's leading brand, fortress-like balance sheet, still-ample earnings, and a controlling family that sooner or later will align itself with outside shareholders," Barron's said. - Reuters

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