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Samsung Electronics Co Ltd (005930) Extended Graph Analysis

February 12th, 2020 Posted by Extended Analysis No Comment yet

Company Profile

Samsung logo

Samsung Electronics Co Ltd is a multiple consumer electronics business which manufactures and sells IT and Mobile Communications and Device Solutions around the world. They have diversified products from home appliances to health and medical equipment aside from smartphones, semiconductor chips, printers and telecom network equipment. Samsung was ranked as one of the top 10 global in technology..

Samsung is a public company traded as KRX: 005930. The company was founded on January 13, 1989 by Lee Byung-chul. The company was headquartered in Suwon, South Korea.

 

Samsung Electronics Co Ltd (005930) Extended Graph Analysis

 

1. SAMSUNG CASH FLOW

SAMSUNG CASH FLOW

2014 2015 2016 2017 2018 2019
Net cash flow provided by operating activities 36,975,389,000,000 40,061,761,000,000 47,385,644,000,000 62,162,041,000,000 67,031,863,000,000 48,093,855,000,000
Net cash used for investing activities -32,806,408,000,000 -27,167,787,000,000 -29,658,675,000,000 -49,385,216,000,000 -52,240,453,000,000 -37,225,406,000,000
Net cash provided by (used for) financing activities -3,057,109,000,000 -6,573,509,000,000 -8,669,514,000,000 -12,560,867,000,000 -15,090,222,000,000 -18,480,578,000,000
Capital expenditure -23,367,250,000,000 -27,382,103,000,000 -25,190,641,000,000 -43,775,974,000,000 -30,576,923,000,000 24,496,471,000,000
Free cash flow 13,608,139,000,000 12,679,658,000,000 22,195,003,000,000 18,386,067,000,000 36,454,940,000,000 23,597,384,000,000

Facts:

  • Net cash flow from operations was KRW 48 trillion. In the trailing twelve months.
  • Net cash used for investing activities  was -KRW 37 trillion in the trailing twelve months.
  • New cash provided by (used for) financing activities was -KRW 18 trillion in the trailing twelve months.
  • Capital expenditure was KRW 24 trillion in the trailing twelve months.
  • Free cash flow was KRW 23.597 trillion in the trailing twelve months.

Explanation:

  • Net income, depreciation and amortization have a significant amount in the cash from operating activities.
  • Net cash from operations were increasing year-over-year from 2014 to 2018. Moreover, the growth was 81 percent in five years.
  • The net cash used for investing activities were property, plant and equipment and purchases of investments.
  • The net cash provided by (used for) financing activities were debt repayment, dividends paid and other financing activities.
  • Capital expenditures were purchases of property, plant and equipment, and purchases of intangibles.
  • Free cash flow was erratic in movement in the last five years, however the company has managed to provide a free cash flow for the business operations.

Interpretation

The cash flow shows that the company is liquid, the management managed to provide a free cash flow per share at KRW 4555.25 in the trailing twelve months. Cash was provided for dividends payment and debt repayment. The net income was sufficient to provide cash from operations.

 

2. SAMSUNG BALANCE SHEET

SAMSUNG BALANCE SHEET

2014 2015 2016 2017 2018 2019
Total cash 61,817,340,000,000 71,493,074,000,000 88,182,313,000,000 83,184,201,000,000 100,939,943,000,000 101,946,477,000,000
Current Assets 115,146,025,999,999 124,814,725,000,000 141,429,704,000,000 146,982,464,000,000 174,697,424,000,000 186,042,134,000,000
Net property, plant and equipment 80,872,950,000,000 86,477,110,000,000 91,473,041,000,000 111,665,648,000,000 115,416,724,000,000 116,855,571,000,000
Total non-current assets 115,276,932,000,000 117,364,796,000,000 120,744,620,000,000 154,769,626,000,000 164,659,820,000,000 167,343,851,000,000
Total assets 230,422,957,999,999 242,179,521,000,000 262,174,324,000,000 301,752,090,000,000 339,357,244,000,000 353,385,985,000,000
Current liabilities 52,013,912,999,999 50,502,909,000,000 54,704,095,000,000 67,175,114,000,000 69,081,510,000,000 63,303,192,000,000
Non-current liabilities 16,227,320,000,000 18,799,845,000,000 21,045,901,000,000 27,363,560,000,000 30,206,741,000,000 34,679,343,000,000
Total liabilities 68,241,232,999,999 69,302,754,000,000 75,749,996,000,000 94,538,674,000,000 99,288,251,000,000 97,982,535,000,000
Retained earnings 169,529,603,000,000 185,132,014,000,000 193,086,317,000,000 215,811,200,000,000 242,598,956,000,000 251,761,348,000,000
Stockholders equity 162,181,725,000,000 172,876,767,000,000 186,424,628,000,000 207,213,416,000,000 240,068,993,000,000 255,403,450,000,000

Facts

  • Total cash was KRW 101.9 trillion in Q3 2019.
  • Current assets were KRW 186 trillion in Q3 2019.
  • Net property, plant and equipment was KRW 116.856 trillion in Q3 2019.
  • Non-current assets are KRW 167 trillion in Q3 2019.
  • Total assets are KRW 353 trillion in Q3 2019.
  • Current liabilities are KRW 63 trillion in Q3 2019.
  • Non-current liabilities are KRW 34.7 trillion in Q3 2019.
  • Total liabilities were KRW 97.982 trillion in Q3 2019.
  • Retained earnings were KRW 252 trillion in Q3 2019.
  • Stockholders equity was KRW 255 trillion in Q3 2019.

Explanation

  • Total cash was increasing year over year and has a growth of 63 percent in five years.
  • Current assets increase year-over-year and have a growth of 62 percent in five years.
  • Net property, plant and equipment increase year-over-year and have a growth of 44 percent in five years.
  • Total non-current assets increase year-over-year and have a growth of 45 percent in five years.
  • Total assets increase year-over-year and have a growth of 53 percent in five years. 
  • Current liabilities represent 65 percent of the total liabilities.
  • Non-current liabilities represent 35 percent of the total liabilities.
  • Total liabilities represent 28 percent of the total liabilities and stockholders equity.
  • Retained earnings represent 99 percent of stockholders equity and has a growth of 49 percent in five years.
  • Stockholders equity represents 72 percent of total liabilities and equity.

Interpretation

The company has a strong balance sheet and is liquid and financially healthy. It has 3 times current assets than current liabilities. Its liquid assets are enough to pay for its current obligations. The stockholders have more stake in the company than of the creditors. It is using more of the stockholders’ investment for the operation of the business.

 

 3. SAMSUNG INCOME AND MARKET

SAMSUNG INCOME AND MARKET

2014 2015 2016 2017 2018 2019
Revenue 208,205,987,000,000 200,653,482,000,000 201,866,745,000,000 239,575,376,000,000 243,771,415,000,000 229,781,171,000,000
EBIT 25,025,071,000,000 26,413,442,000,000 29,240,672,000,000 53,645,038,000,000 58,886,669,000,000 31,408,838,000,000
Net Income 23,082,499,000,000 18,694,628,000,000 22,415,655,000,000 41,344,569,000,000 38,573,066,000,000 21,625,415,000,000
Market Capitalization 200,085,060,000,000 180,755,714,000,000 245,868,758,000,000 341,450,038,000,000 257,157,237,000,000 375,782,850,000,000
Intrinsic Value 102,886,880,946,227 152,775,056,577,764 192,305,845,455,446 589,116,872,065,884 544,412,951,961,468 619,972,272,761,983

Facts:

  • Revenue was KRW 230 trillion in the trailing twelve months.
  • EBIT was KRW 31 trillion in the trailing twelve months.
  • Net income was KRW 22 trillion in the trailing twelve months.
  • Market capitalization was KRW 376 trillion in the trailing twelve months.
  • Intrinsic value was KRW 619.972 trillion in the trailing twelve months.

Explanation:

  • Revenue was averaging KRW 221 trillion in five years and has a growth of 17 percent from 2014 to 2018..
  • EBIT was averaging KRW 37 trillion and has a growth of 135 percent from 2014 to 2018. 
  • EBIT represents 14 percent of the revenue.
  • Net income was averaging KRW 28 trillion and has a growth of 67 percent from 2014 to 2018.
  • Net income represents 9 percent of the revenue.
  • Market capitalization was erratic in movement in the last five years, however it has a growth of 88 percent in five five years.
  • Intrinsic value is greater by 65 percent against market capitalization.

Interpretation

The company was profitable and the management is capable of generating sufficient revenue for the business operation. The financials have not seen any negative bottomline in the last five years.

 

4. SAMSUNG FINANCIAL RATIOS

SAMSUNG FINANCIAL RATIOS

2014 2015 2016 2017 2018 2019
Asset turnover (average) 0.93 0.85 0.8 0.85 0.76 0.67
Return on assets % 10.39 7.91 8.89 14.66 12.03 6.26
Return on equity % 15.07 11.17 12.49 21.02 17.26 8.83
Debt/Equity 0 0.01 0.01 0.01 0 0.01
Return on invested capital % 13.41 10.01 11.23 19.01 15.56 7.66
Interest coverage 48.01 34.43 53.25 86.74 91.66 48.71

Facts:

  • Asset turnover was averaging 0.67 in the trailing twelve months.
  • Return on asset was 6.26 percent in the trailing twelve months.
  • Return on equity was 8.83 percent in the trailing twelve months.
  • Debt/Equity ratio was 0.01 in the trailing twelve months.
  • The return on invested capital was 7.66 percent in the trailing twelve months.
  • Interest coverage was 48.71 in the trailing twelve months.

Explanation:

  • Asset turnover indicates that for every one KRW in asset, the company generates 67 chon of sales. 
  • Return on asset indicates that for every KRW invested in assets, the company generates 6.3 chon of net income.
  • Return on equity indicates that for every KRW of shareholders equity, the company generated 8.83 chon of profit.
  • Debt/Equity ratio means that the company has KRW 0.01 in debt for every KRW of asset.
  • Return on invested capital indicates that the return generated from its investment was 7.66 percent.
  • Interest coverage indicates that the company has more than enough cash to pay for the interest payment.

Interpretation

The company is liquid and financially healthy.

5. SAMSUNG KEY EXECUTIVE COMPENSATION

Name Title
Kinam King Vice Chairman and CEO
Hyun Suk King President and CEO
Dong Jin Koh President and CEO
Oh-Hyung Kwon Executive Director,Vice Chairman and CEO
Boo-Keun Yoon Executive Director,President and Co-CEO
Jong-Kyun Shin Executive Director,President and Co-CEO
Sang-Hoon Lee Executive Director,President and Chief Financial Officer

Facts:

The company does not disclose its key executive compensation. 

 

6. SAMSUNG LOBBYING AND CONTRIBUTIONS

SAMSUNG LOBBYING AND CONTRIBUTIONS

DATA

Period USD Period USD
1998 83,070,000 2009 130,550,000
1999 52,050,000 2010 131,000,000
2000 80,660,000 2011 128,440,000
2001 66,060,000 2012 124,320,000
2002 75,870,000 2013 130,730,000
2003 89,829,000 2014 119,520,000
2004 97,010,000 2015 124,770,000
2005 110,710,000 2016 121,150,000
2006 120,510,000 2017 147,520,000
2007 134,380,000 2018 147,750,000
2008 137,380,000 2019 156,390,837

Explanation

The company, Samsung Electronics Mfg and Equipment have been incurring lobbying and contributions expenses since 1998 and onwards. The figures above are the calculations by the Center of Responsive Politics based on data from the Senate Office of Public Records. Data for the most recent year was downloaded on January 23, 2020 from January 1 to December 31. Prior years include spending from January through December, according to the Center for Responsive Politics.

Interpretation

Total spent on Electronics Mfg and Equipment in 2019 was USD 156,390,837, the number of clients was 262.

The number of lobbyists /percent of former government employees was 1,089 at 72.73 percent.

Source:  OpenSecrets.org Center for Responsive Politics

 

7. SAMSUNG FINANCIAL STRENGTH

SAMSUNG FINANCIAL STRENGTH

DATA

Working capital 105,615,914,000
Total assets 339,357,244,000,000
Sales 229,781,171,000,000
EBIT 31,408,838,000,000
Market value of equity 375,782,850,000,000
Book value of total liabilities 99,288,251,000,000
Retained earnings 242,598,956,000,000

CALCULATION

Ratio Score Result
A – Working Capital / Total Assets 0.0003 1.20 0.00
B – Retained Earnings / Total Assets 0.71 1.40 1.00
C – EBIT / Total Assets 0.09 3.30 0.31
D – Market Value of Equity / Book Value of Total Liabilities 3.78 0.60 2.27
E – Sales / Total Assets 0.68 1.0 0.68
Z-Score     4.25

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Explanation:

Z-Score is a statistical measurement that compares data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

Samsung Electronics Co Ltd. has a Z-Score of 4.25. Dr. Altman’s grading scale of 3.0 and above indicates that the company will not declare bankruptcy in near future. In other terms, the company is not close to insolvency. The main factors of this statistical measurement are profitability, liquidity, leverage and efficiency.

Overview

Samsung Electronics Co Ltd.was profitable and is financially healthy and liquid. The calculated financial strength was strong. Based on the calculation of its intrinsic value, the stock was undervalued on the date of posting of this article and could be a good candidate for a Buy.  

 

CITATION

https://www.samsung.com/us/aboutsamsung/home/

https://www.opensecrets.org/federal-lobbying/industries/summary?cycle=2019&id=B12

https://www.morningstar.com/stocks/xkrx/005930/quote

Research and written by Criselda

 

Note:

Research Reports can be found under the company tab.