Samsung Electronics Co.’s market capitalization surpassed 400 trillion won ($358.4 billion) on Wednesday for the first time as investors welcoming the company’s stellar third-quarter results and generous shareholder benefits have flocked to pick up its stocks.

On Wednesday, Samsung Electronics’ common stocks listed on the primary Korea Composite Stock Price Index (Kospi) climbed 3.9 percent from a previous session to close at 2,861,000 won and its preferred stocks jumped 4.2 percent to 2,335,000 won. The gains have buoyed the combined market capitalization of Samsung Electronics’ common and preferred stocks to 414.27 trillion won - 371.27 trillion won for common stocks and 43 trillion won for preferred stocks. This is the first time for the combined market cap value of Samsung Electronics to breach a 400 trillion won milestone.

So far this year, the market capitalization of Samsung Electronics’ common stocks has surged 46 percent, steeper than gains in its global information technology (IT) rivals’. Market capitalization of Apple Inc., the largest company on U.S. Nasdaq by market value, surged 41 percent over the same period, followed by Google Inc. with 32 percent and Intel Corp. with 24 percent.

The Korean tech giant’s outperformance in stocks against its global peers has come after the company has beaten its rivals in terms of earnings growth. Samsung Electronics, also the world’s largest smartphone and memory chip maker, on Tuesday confirmed that it raked in 14.5 trillion won in operating profit for the third quarter ended September, which is expected to beat Apple’s third-quarter operating profit estimated at 14.2 trillion won by Bloomberg. Samsung Electronics already raised 2 trillion won more in operating profit than Apple in the second quarter ended June.

Along with its largest-ever quarterly earnings, the company on Tuesday also announced it would pay out around 29 trillion won in cash dividends over the next three years, welcoming news to stock investors. For this year, the company vowed to allocate 4.8 trillion won on dividends, up 20 percent from 4 trillion won last year. It also started to repurchase and cancel 712,000 common stocks and 178,000 preferred stocks in the fourth phase of its share buyback program on Wednesday, a process that will likely take about three months to complete.

Samsung Electronics that already topped Intel as the world’s biggest chipmaker by sales in the April-June period has further widened earnings gap with the American chipmaker. The Korean tech titan’s semiconductor business alone raised 9.96 trillion won in operating income in the third quarter, outpacing Intel that generated 5.71 trillion won over the same period. Operating margin of Samsung Electronics’ chip division also reached 50 percent, nearly 20 percent points higher than Intel’s 31.7 percent. The latest march in Samsung Electronics stocks has further widened the market capitalization gap between the two companies from 61 trillion won early this year to 133 trillion won.

Samsung Electronics’ profit has also outpaced the combined profit of the so-called big four U.S. IT companies - Facebook, Amazon, Netflix, and Google. In the second quarter, total operating income of the four companies was 10.48 trillion won.

Lee Soon-hak, analyst at Hanwha Investment and Securities Co., revised Samsung Electronics’ target stock price up to 3.5 million won on Wednesday, citing the company’s unrivaled technological prowess in the burgeoning high-performance semiconductor sector.

Despite the noticeable surge in its stocks this year, market analysts expect Samsung Electronics’ stocks would rise higher, saying that its stocks are still undervalued compared to its peer global IT giants’ shares. According to Daishin Securities Co., Samsung Electronics’ price per earnings (PER), which measures a company’s earnings per share, stands at 9.2 based on its profit estimate for this year. The figure is far below 15.8 for Apple and 14.2 for Intel. The PER for Google, Facebook, and Microsoft is over 20.

Do Hyun-woo, analyst at Mirae Asset Daewoo Securities Co., noted that considering Samsung Electronics’ earnings forecast for this year, Samsung Electronics stocks are still undervalued compared to its global rivals even after the recent surge in its market capitalization.

Thanks to the stellar performance of market bellwether Samsung Electronics, Korea’s main stock market Kospi has continued to zoom, finishing the session on Wednesday with a 1.31 percent gain from the previous day at 2,556.47. The index topped 2,550 within two days after it breached the 2,500 mark for the first time on Monday since its launch. Foreign investors have remained bullish on Korean stocks, net purchasing Korean Inc. shares for a fourth consecutive day. Since October, they have net bought 3 trillion won or more worth of Korean stocks.

The secondary Kosdaq index also surged to a record yearly high at 695.77 on Wednesday. Strong Kospi and Kosdaq indices have led the average daily trading volume to exceed 10 trillion won for the first time in two years last month.

By Shin Heon-cheol and Lee Eun-joo

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