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  "documentTitle": "Samsung C&T Corporation (028260 KS)",
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  "presentationDate": "2023-12-06 00:00:00",
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  "notes": "Uses a custom flow diagram to contrast 'Cash In' vs 'Cash Out' with specific annotations (a, b, c) critiquing the policy.",
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      "text": "SCT's capital allocation framework and the strategic rationale behind it are vague and confusing. None of the free cash flow generated by the operating businesses is returned to shareholders causing many to ignore the value of those businesses",
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      "text": "Illustration of Current Capital Allocation for 2024-25 (in KRW bn)",
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      "text": "a: Shareholder Returns Policy: Solely passes through 60-70% of dividends received from affiliates as SCT dividend. No buy-back, dividends only: Policy ignores highly accretive opportunity to buy back stock at 63% discount to NAV. Dividends are also tax inefficient for many shareholders compared to buybacks",
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      "text": "b: Free cash flow from operations not made available for shareholder returns: Results in low overall payout ratio (c.25% of cash flow available returned to shareholders)",
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      "text": "c: No clarity on investment framework, hurdle rate or expected returns: Market therefore attributes little value to capital retained for potentially valuable investments",
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      "text": "SCT's capital allocation framework and the strategic rationale behind it are vague and confusing. None of the free cash flow generated by the operating businesses is returned to shareholders causing many to ignore the value of those businesses",
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      "kind": "source-note",
      "text": "Source: Company, Analyst research, Palliser analysis. Note: (1) FCF from operating businesses of KRW 1,300-1,400bn after c.KRW300 bn of current on-going capex (2) Capex breakdown as per Palliser's estimates based on communication with the Company (3) New Capex in Current Operating Businesses are capex in addition to the c.KRW300 bn of current on-going capex dedicated to further enhance operating business' of competitivity",
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      "text": "Capital Allocation: Current Framework is Neither Robust nor Effective",
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