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Samsung shares closed at an all-time high: Here’s 3 reasons why

Samsung shares hit an all-time closing high on Thursday as investors cheered the company's turnaround plan, helped by what has been hailed as a return to form in the smartphone sector.

The South Korean electronic giant's stock is up nearly 30 percent year-to-date, closing at 1,640,000 won a share, giving it a market capitalization of 232 trillion won ($210 billion).

CNBC looks at some of the reasons for renewed investor bullishness:

Smartphone revival

The Galaxy Note 7 can scan a person's eyes to unlock the phone.
Samsung
The Galaxy Note 7 can scan a person's eyes to unlock the phone.

In 2014, the company struggled with falling market share and intense competition from the likes of Apple and Chinese brands such as Xiaomi. Its Galaxy S5 flagship phone that year was met with lukewarm reception.

But the release of the S6 and S6 Edge in February 2015 marked a turnaround in Samsung's smartphone business. And the S7, S7 Edge and Note 7 have continued that process and the company considers it is now in a position to challenge Apple.

Following this shift in focus, operating profit in its IT and mobile communications division – of which smartphone sales are a large chunk – were up 56 percent year-on-year in the second quarter of 2016.

Samsung said consumer interest in the Note 7, its phablet device released earlier this month, "has already exceeded that seen with the Galaxy S7 and S7 edge", adding that it intends to limit pre-order supply to meet demand when it goes on sale next month.


Strong component business

While smartphones are its biggest business, Samsung also makes a number of smartphone components and panels for TVs.

It has been investing heavily in its semiconductor unit where it supplies components to companies including Apple. It also produces organic light-emitting diode (OLED) displays used in televisions. Sales in its semiconductor business were up 6 percent year-on-year in the second quarter.

"They are industry leaders in plastic OLED, and everyone else is trying to catch them in this new space, obviously Samsung has unbeatable tech. That is why the market is getting excited about Samsung outlook," Daniel Kim, equity analyst at Macquarie Research, told CNBC by phone.


Restructuring

Samsung has received criticism for the complicated ownership structure of the group, and since 2014 has been restructuring the business to make it more transparent.

Samsung Life insurance announced Thursday that it was to buy shares in Samsung Securities from two of the company's affiliates.

The South Korean insurance firm will pay 234 billion won for Samsung Fire and Marine Insurance Co's 8 percent stake in Samsung Securities.