SEOUL—After three years of struggle, shares of Samsung Electronics Co. roared to an all-time closing high on Thursday, capping a 30% rally this year that underscores the technology giant's improved fortunes.

Shares of the world's largest maker of smartphones by shipments jumped 4.7% to finish the day at 1,640,000 Korean won ($1,480) a share, giving it a market capitalization of 232 trillion won ($210 billion).

That makes Samsung five times as valuable as Japan's Sony Corp. and puts it within striking distance of Chinese internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd. as Asia's most valuable technology companies.

It also puts Samsung ahead of Intel Corp., Coca-Cola Co. and Visa Inc. in market-cap rankings, though its main rival Apple Inc.'s market cap of $562 billion—the world's largest—remains nearly three times that of Samsung.

Samsung's surge comes after the Suwon, South Korea-based company reported its most profitable quarter in two years last month, as operating profit at its mobile unit jumped 57% in the April-to-June period from a year earlier.

Samsung's recent surge gives its stock even more sway over South Korea's stock market, where it is already the biggest component on the country's market cap-weighted benchmark, the Kospi composite index.

Samsung accounts for about 21% of the South Korean stock market by market cap, and is more valuable than the index's eight next biggest companies combined, a list that includes Hyundai Motor Co. and SK Hynix Inc., the world's second-largest producer of memory chips.

Samsung's stock gains, which have boosted the company's value by 44% over the past year, stand in contrast to rival Apple Inc., which has fallen 5.8% over the same period amid slumping iPhone sales.

Samsung's price-to-earnings ratio, a measure of the premium that investors assign to a company relative to profit expectations, has nearly caught up with Apple for the first time in about three years. Samsung shares recently rose to trade above 10 times earnings for the first time in several years, according to data from FactSet, while Apple's ratio has gradually fallen to about 12.6 times at the end of July.

Samsung's rise this year into fresh record territory comes as vindication for long-suffering shareholders of Samsung, which has traded almost exclusively within a fixed band since the beginning of 2012, even as Samsung became one of the world's best-known technology brands, outselling Apple by as much as three smartphones to one at one point.

But investors remained unimpressed with Samsung's paltry dividends and unconvinced about the company's ability to sustain its smartphone lead, as other once-dominant mobile-phone players like Nokia Corp., Motorola and BlackBerry Ltd. quickly lost their crowns.

Unlike those companies, Samsung has bounced back after two difficult years in smartphone wars to reassert itself as the industry's dominant player. After Samsung's mobile profit margin were ravaged by competition from low-cost Chinese handset makers, Samsung has managed to push its profit margin back up to 16%, the highest level since 2014.

"These guys pulled themselves up from the abyss," said Joe Vari, a San Francisco-based portfolio manager at Artisan Partners Asset Management Inc., which manages $95 billion in assets, and has been betting on Samsung for the past three years.

In an interview, Mr. Vari chalked up the company's improved fortunes to the company's long-term focus and its improved shareholder returns.

Samsung's continued investment in semiconductors and display panels—on the magnitude of almost $20 billion a year—has given it a technological lead over rivals like Micron Technology Inc. in memory chips and LG Display Co. in smartphone displays.

That positions Samsung well to ramp up its sales of smartphone components to handset companies like Apple and rivals in China, analysts said.

Artisan Partners began buying shares of Samsung in late 2013 and has steadily boosted its shareholdings in Samsung over the past three years, Mr. Vari said. Samsung is now the biggest shareholding in Artisan's $11.1 billion International Value Investor fund, accounting for 5.2% of the fund at the end of June.

Write to Jonathan Cheng at jonathan.cheng@wsj.com

 

(END) Dow Jones Newswires

August 18, 2016 08:25 ET (12:25 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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