Samsung shares meltdown lures some investors to buy

The debacle that sent Samsung Electronics to its biggest three-day stock rout since 2012 isn’t scaring TT International and Skagen from South Korea’s biggest company.

“Samsung offers exceptional value; we have added to our position,” said Duncan Robertson, a portfolio manager at TT International, whose Asia Pacific Equity Fund beat 90% of peers over the past year with a 21% annual return.

“The battery issue can only be a long-term threat if the company doesn’t take the correct steps to restore its brand. We have confidence that they have taken the correct steps so far,” he said.

Foreign investors are braving the widest share volatility in five years after a three-day rout shaved about €20.7bn off Samsung’s market value.

Overseas funds have pulled millions of euro this week from the nation’s equities as prospects for higher US borrowing costs weigh on emerging markets.

The world’s biggest phone maker said it is ending production of its problematic Galaxy Note 7 smartphones, taking the drastic step of killing off a device in one of the deepest crises in its history.

It had already recalled the Note 7 once last month after early models exploded and the latest move comes after customers reported that replacement phones were also catching fire.

“Samsung will come out of this episode relatively unscathed. Any impact would be temporary,” Kar Tzen Chow, a Kuala Lumpur-based fund manager at Affin Hwang Asset Management, said.

“It will survive this episode and move on.”

He said he’s looking at the current price weakness to buy more shares.

The stock sank 0.7% yesterday, bringing the three-day slump to 10%, the most since May 2012, after reaching a record high last Friday.

The shares had plunged 8% on Tuesday and dragged valuations to near the cheapest level in eight months.

“The recent pullback in the share price offers an attractive entry point, a buying opportunity, for long-term investors,” said Knut Gezelius, a fund manager at Norway’s Skagen.

“We believe the battery issue in Samsung most likely is a short-term issue with limited impact on the intrinsic value of the company.”

Not everyone is optimistic.

The uncertainty over its brand reputation and reliability amid rising competition would be a big challenge to overcome, according to Samir Mehta, a Singapore-based senior fund manager at JO Hambro Capital Management.

The stock isn’t cheap enough yet to buy, he said.

Bloomberg