Welcome to the club, SoftBank. The Japanese telecoms operator and tech investor just passed the milestone of a $100bn market capitalisation. Such round numbers might often be meaningless. This one has value as a chance to take stock of other Asian members of this club. One member of the tiny group stands out: Samsung Electronics. It is too large for its home stock market.
Excluding China’s state-owned enterprises (their size is about policy as much as business success), SoftBank is one of only seven. The others are Toyota, BHP Billiton, Samsung, Commonwealth Bank of Australia, Rio Tinto, and Tencent. Samsung is by far the cheapest, trading on just 7 times its expected earnings – less than half the average of its six peers. Comparing computers to cars and commodities is unfair but within the broad technology world the point becomes more stark: Samsung’s forward price/earnings ratio is less than a third the average of the industry. Of companies worth more than $100bn, it is still trading at half the price.
One reason for this is Samsung’s extraordinary size relative to its bourse. The group is just shy of a fifth of Korea’s benchmark Kospi (the next largest is Hyundai at 5 per cent). No other big index in Asia is so concentrated. Toyota is 6 per cent of Tokyo’s Topix and SoftBank is 2 per cent. With many investors restricted to perhaps a tenth of their country allocation in a single stock, Samsung is doubtless under-held relative to its peers elsewhere.