Why Are Samsung’s Valuation Multiples So Low?

Samsung’s (OTC:SSNLF) stock trades at valuation multiples that are well below most of its Western peers such as Apple. There are multiple factors causing this discrepancy. Firstly, Samsung’s business has been facing headwinds, with revenues shrinking over the last two years as its bread and butter smartphone business faces competition from low-cost Chinese vendors, while its semiconductor business contends with a glut in the memory markets. Secondly, Samsung’s stock is not available as an ADR in the U.S. markets, and investors either need to buy it via the OTC market or from the London market as a GDR. This potentially reduces the company’s investor base and valuation. Thirdly, Samsung Electronics is part of a family-run conglomerate and its ownership structure is extremely complex, with multiple cross-shareholdings involving other firms in the Samsung Group and the promoter family. While Samsung has been taking steps to realign its ownership structure, investors are likely applying a corporate governance discount, weighing on the firm’s multiples.

See our complete analysis for Samsung