Company Profile

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

	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

	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

	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

	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

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

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