By: Rita
Samsung Electronics' shareholder return plan has failed to meet the market's short-term expectations. Goldman Sachs believes that sustained FCF expansion and a stable return mechanism, rather than the size of a one-time return, are what truly support valuation recovery.
On August 23, Goldman Sachs released a report stating that Samsung announced an expected shareholder return pool for 2026 in the range of 90 trillion to 110 trillion won. Previous media reports suggested this year's return size could reach 150 trillion won; the median guidance of about 100 trillion won is below market expectations. Goldman Sachs maintains its Buy rating on Samsung Electronics common stock with a target price of 490,000 won, implying a 74% upside from the current stock price.
Samsung Electronics is one of the world's largest technology companies, holding the top global market share in several categories including memory chips, OLED panels, smartphones, and televisions. Goldman Sachs expects robust profitability from the memory business to continue, with substantial progress also being made in the HBM field.
Returns Below Expectations, Sustainable Return Mechanism is Key
Samsung did not announce a large-scale one-time return like SK Hynix but clarified a plan for phased returns. The company stated it will pay a cash dividend of approximately 30 trillion won in the third quarter, with the specific amount to be determined by the board at the end of October. The remainder will be executed after the January 2027 earnings announcement, in forms such as dividends and share buybacks/cancellations.
Goldman Sachs estimates Samsung's cumulative FCF from 2024 to 2026 will be about 270 trillion won. Calculating a 50% return ratio, total returns would be approximately 135 trillion won. Subtracting the 20.9 trillion won in dividends and 8.4 trillion won in buybacks already paid for 2024-2025, the 2026 return is about 106 trillion won, at the higher end of the guidance range.
The return composition will tilt towards dividends. Goldman Sachs expects a dividend of about 30 trillion won in Q3 2026, a year-end dividend slightly above 40 trillion won, and full-year dividends of about 76 trillion won. The remaining approximately 30 trillion won will be completed through buybacks and cancellations. The higher dividend proportion is due to Samsung approaching the threshold for separate taxation on dividend income, and regulatory limits on the proportion of shares held by financial affiliates in non-financial group affiliates.
Micron has announced it will return 100% of excess cash to shareholders, SK Hynix has committed to returning over 50% of FCF and initiated a 40 trillion won buyback, and Sandisk and Kioxia are also expanding buyback scales. Samsung's return plan falls short of peers in terms of short-term size, but Goldman Sachs expects FCF to continue expanding from 2027 to 2028, allowing its return capability to gradually approach or even surpass peer levels.
FCF Growth Supports Future Returns
Samsung did not disclose return plans for 2027 and beyond. Goldman Sachs expects FCF to grow significantly, potentially increasing the stability of shareholder returns. Even under the existing 50% FCF return policy, Goldman Sachs forecasts the return pool to increase to 179 trillion won and 232 trillion won in 2027 and 2028, respectively.
Goldman Sachs assumes quarterly ordinary dividends will rise to about 10 trillion won per quarter from 2026 onwards, with an additional larger dividend paid at year-end. Based on adjustments to cash flow assumptions and buyback/dividend expectations, Goldman Sachs raised its EPS forecasts for 2026-2028 by 1%, 7%, and 11%, respectively. ROE expectations increased from 52%, 48%, 39% to 53%, 52%, 43%.
Valuation Remains Attractive
Samsung's current stock price corresponds to a forward P/B of 1.7x for 2027 and 1.2x for 2028, with an ROE of 40% to 50% for the same periods. Goldman Sachs views the risk-reward ratio as attractive, believing sustained and substantial shareholder returns will drive multiple expansion.
The 490,000 won target price is based on a SOTP valuation using 2026-2027 EV/EBITDA. The preferred stock target price is 360,000 won, based on a 27% discount to the common stock. Downside risks include deterioration in memory supply/demand, a sharp decline in smartphone margins, and loss of OLED panel market share.
While the market's short-term expectations for Samsung's return plan were disappointed, the sustained expansion of FCF and a stable return mechanism provide longer-term certainty. Samsung's shareholder return story represents a structural improvement, not a one-time event.
Disclaimer
This article is Chaoxiang Research's compilation and interpretation of a third-party brokerage research report (Goldman Sachs, August 23, 2026), combined with publicly available market information. The ratings, target prices, profit forecasts, and related judgments cited in the article are the views of the analyst of that brokerage firm, representing only the position of their institution, and do not represent the views of Chaoxiang Research, nor do they constitute any investment advice.
Markets involve risks, decisions should be made independently. This article should not be used as a basis for buying or selling any securities.
