Shares of Samsung Electronics clinched a near six-month high on Thursday, after the South Korean tech giant unveiled a share buyback plan worth $10 billion, alongside a better-than-expected third-quarter earnings report.
The heaviest-weighted stock on South Korea's Kospi index surged as much as 6.4 percent to 1,392,000 won in early trade, hitting its highest level since May 4, but has since narrowed gains to 1.5 percent as of 12pm local time.
"I think the market is pleased with the results and happy to see the company taking steps to clean some of the $52 billion in cash and short-term assets off its balance sheet to the benefit of shareholders," Roger Kay, president and founder at Endpoint Technologies Associates, told CNBC in an email interview on Thursday.
Samsung said on Thursday it plans to buy back and cancel 11.3 trillion won ($9.87 billion) worth of its own shares over the next year to boost shareholder value.
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In its regulatory filings and a statement, Samsung said it will initially buy back 4.2 trillion won worth of common and preferred shares from Friday until January 29 2016 because it believes the company's share prices are undervalued. The company also said it will return between 30 to 50 percent of its annual free cash flow over the next three years, via dividends or share buybacks.
It is also considering paying dividends on a quarterly basis starting next year.
Over the past year, the South Korean tech giant has come under increasing pressure from shareholders to return some of its cash hoard though dividends or share buybacks.
"Samsung continues to believe its stock is undervalued considering it sees itself as a 'unicorn' company in consumer hardware space. Hence, the company has announced a share buyback to stimulate the stock price and [get] investors to value Samsung's stock relative the potential and unmatched scale it brings to the table," said Neil Shah, research director of devices & ecosystems at Counterpoint Research.