[Click eStock] 2Q 'Earnings Surprise' SK Telecom, Strong in Both Core and Side Businesses

Growth Across Not Only Mobile Communications but Also Media, Security, and Commerce

[Asia Economy Reporter Minwoo Lee] SK Telecom posted a surprise performance in the second quarter of this year, exceeding market consensus by 10%. It is analyzed that the company established a stable profit structure by performing well not only in the mobile communication business but also in media, security, and commerce.

On the 7th, Ebest Investment & Securities maintained a 'Buy' rating on SK Telecom and raised the target price by 8% to 270,000 KRW. The closing price the previous day was 220,500 KRW. This was based on the surprise performance in the second quarter, indicating sufficient potential for additional growth going forward.

The day before, SK Telecom announced consolidated sales of 4.6028 trillion KRW and operating profit of 359.5 billion KRW for the second quarter of this year. Compared to the same period last year, sales increased by 3.7% and operating profit by 11.4%. Net profit for the period rose 66.8% to 432.2 billion KRW. Both operating profit and net profit exceeded market expectations by 12.9% and 20.9%, respectively, marking a surprise performance.

Hyunyong Kim, a researcher at Ebest Investment & Securities, explained, "Specifically, mobile network operator (MNO) sales increased by 3.2%, and the media segment saw sales grow by 16% and operating profit by 45% due to the effect of the TV Broad acquisition. The profit contribution from non-mobile communication business sectors, including security and commerce, surged by 10 percentage points year-on-year to 25%, demonstrating excellent growth potential and profit stability."

In particular, the strong external growth of the non-mobile communication sector was highly evaluated. The gross merchandise volume (GMV) of 11st and SK Stoa increased by 19% and 64% year-on-year, respectively, resulting in a 22% increase in total commerce transaction volume. This marked a return to profitability after three quarters. Meanwhile, media sales increased by 16% with the added effect of the TV Broad merger. The number of IPTV subscribers, a key profitability driver, showed steady growth with a net increase of 100,000. Security sales also grew by 9% year-on-year, achieving a favorable growth rate.

Researcher Kim forecasted, "Considering this surprise performance, the annual operating profit forecast is expected to be revised upward to around 1.21 trillion KRW. Despite the somewhat slow spread of 5G, mobile phone revenue is showing a steady recovery, and the profit contribution from subsidiaries has increased to 25%, making differentiated growth centered on media and commerce effective."