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Samsung Electronics on Wednesday became one of only four Asian companies with a market capitalisation of more than $100bn, underscoring its emergence as a leading global technology group.
The South Korean company has become the largest maker of flat screens, the second-largest chipmaker and number three mobile phone producer in the world, after spending billions of dollars to secure a technological edge over rivals.
Samsung is now second only to Vodafone among non-US technology stocks measured by market capitalisation, after overtaking Nokia, Motorola and Sony in size. Sony, Samsung’s arch-rival whose market capitalisation reached $107bn in 2000, is now valued at less than half that of Samsung.
Samsung nearly doubled its revenue to $57bn in 2004 from $34bn in 2000, driven by surging demand for digital consumer products.
Its stock price gained 46 per cent last year but analysts said the shares were still undervalued compared with its global peers. On Wednesday its shares rose 5.11 per cent to a record Won699,000, pushing Samsung’s market capitalisation to $102bn.
“Its market value as a top-tier technology company is still dented by the IT sector’s cyclicality in earnings,” said Michael Min, an analyst at Korea Investment & Securities. “But the valuations will become stronger this year, as the semiconductor industry is recovering and Samsung’s investment in research and facilities takes effect.”
Samsung’s shares trade at 12 times estimated 2006 profit, according to Thomson Financial, compared with Intel’s 16 times future earnings and Nokia’s 17 times.
Analysts expect Samsung’s fourth-quarter earnings to top estimates, helped by brisk sales of flash memory chips, despite weaker prices of D-Ram chips.