Summary
- KCC said its shares have risen 24.74% in August after the company unveiled a shareholder return plan tied to its 10.49% stake in Samsung C&T and a special dividend from Samsung Electronics.
- KCC said it has formally committed to using more than 50% of the special dividend received from Samsung C&T as dividend funding, while also proceeding with the cancellation of 13.2% of its treasury shares and returning part of the proceeds from financial asset sales to shareholders.
- Brokerages are maintaining a top-pick view on the stock, citing a dividend yield of 4.4% to 5.8%, undervaluation at 0.38 times PBR, and the prospect of a narrower holding-company discount.
KCC up 24.74% in August
Holds 10.49% stake in Samsung C&T
Samsung Electronics special dividend may flow through Samsung C&T
Investor focus is turning to KCC as Samsung Electronics nears a decision on its shareholder return plan. KCC owns a 10.49% stake in Samsung C&T, which has said it plans to return a substantial portion of any special dividend it receives from Samsung Electronics. In its “2026 Corporate Value Enhancement Plan,” KCC said it would use any special dividend received from Samsung C&T as a source of shareholder returns.
According to the Korea Exchange, KCC rose 9,500 won, or 2.00%, to close at 484,000 won on Aug. 21. The stock has climbed 24.74% so far this month.
The shares jumped 8.46% on Aug. 20. The rally accelerated around 11:48 a.m. after KCC disclosed a value-up plan that formally committed to using more than 50% of any special dividend received from Samsung C&T to fund dividends.
KCC said in the filing that the special dividend would be calculated based on the portion of Samsung C&T’s per-share dividend exceeding the minimum payout of 2,500 won. Any remaining funds would be used to improve the financial structure, including debt repayment. The company also kept its existing policy of paying at least 6,000 won a share when standalone operating profit is below 100 billion won, and an additional dividend equal to 10% of standalone operating profit when that figure is 100 billion won or more.
The move comes as Samsung Electronics, in which Samsung C&T owns a 5.11% stake, has unveiled a shareholder return plan of as much as 110 trillion won backed by record free cash flow. That has fueled expectations that a Samsung Electronics special dividend could ultimately reach KCC shareholders through Samsung C&T. Samsung C&T has also said it plans to return 60% to 70% of dividend income from affiliates from 2026 to 2028.
Hana Securities earlier presented two dividend scenarios for KCC based on the assumption that Samsung Electronics had about 120 trillion won in remaining shareholder return funds.
Under the maximum scenario, which assumes 70% of Samsung Electronics’ shareholder return pool is paid as a special dividend and Samsung C&T returns 70% of that amount, total DPS would reach 29,131 won, implying a dividend yield of 6.1%.
Under the minimum scenario, which assumes a 50% special dividend payout by Samsung Electronics and a 60% return rate by Samsung C&T, KCC’s special DPS would be 11,664 won. Combined with an ordinary dividend of 10,079 won, total DPS would come to 21,744 won, for a dividend yield of 4.6%.
Applying Samsung Electronics’ estimate of about 110 trillion won in remaining shareholder return funds to Hana Securities’ framework yields an implied dividend yield for KCC this year of about 4.4% to 5.8%.
Along with a dividend increase, the company is also moving ahead with treasury share cancellations and plans to monetize non-core investment assets. KCC is canceling 1,174,300 treasury shares, or 13.2% of the total excluding shares set aside for employee compensation, in four stages. It completed the first round, covering 293,575 shares, in April and plans to finish the full cancellation by September 2027.
The company also formalized a plan to sell financial assets held for investment purposes, including Samsung C&T shares, at an appropriate time and return part of the gains to shareholders. As of the end of June, the value of KCC’s Samsung C&T stake stood at about 7.969 trillion won, while the total valuation of its financial assets, including HD Hyundai Heavy Industries Holdings, reached 9.083 trillion won. The company also set mid- to long-term targets of achieving a price-to-book ratio of at least 1.0 times and an operating margin of 10% by 2030.
Brokerages turned broadly positive on the stock, citing the clearer link between cash flow from KCC’s holdings and shareholder returns.
Lee Jin-myung, a senior analyst at Shinhan Securities, said the central point of the plan was that KCC had formalized the principle of directly returning cash flow generated from its Samsung C&T stake to its own shareholders. With the value of that holding far exceeding KCC’s market capitalization, a stronger shareholder return link could ease the holding-company discount and prompt a reassessment of asset value.
Cho Hyun-ryeol, an analyst at Samsung Securities, said it was encouraging that KCC had spelled out a way for investors to share in the gains during the holding period, given that the size of its investment assets made a full near-term sale difficult. He maintained a top-pick view on the stock within the sector.
Yoon Jae-sung also pointed to valuation appeal. He said the stock remained deeply undervalued at 0.38 times price-to-book, considering the silicone upcycle and the company’s strong shareholder return strategy.
Han Gyeong-u, Hankyung.com reporter [email protected]
Disclaimer: The market is risky, and investment needs to be cautious. This article does not constitute investment advice. Users should consider whether any opinions, views, or conclusions in this article are in line with their specific circumstances. Investment based on this is at their own risk.