[Click eStock] "KT Expected to Surpass Consensus on Q4 Operating Profit"

[Asia Economy Reporter Oh Ju-yeon] KB Securities forecasted that KT's operating profit in the fourth quarter of this year will exceed market consensus. They also noted that with the recent spread of the novel coronavirus infection (COVID-19), the ultra-high-speed internet environment is improving, and KT's shareholder return policy is being strengthened, which will increase interest in dividends. Accordingly, they maintained a 'Buy' investment rating and a target price of 36,000 won.

According to KB Securities on the 22nd, KT's operating profit for the fourth quarter of this year is expected to increase by 70.1% year-on-year to 252.1 billion won. This level surpasses the market consensus by 22%.

Researcher Kim Jun-seop diagnosed, "Despite seasonal cost occurrences, the performance improvement of wireless services is effective." The IPTV business division reflected the results of the home shopping transmission fee negotiations concluded in the third quarter, driving the average revenue per user (ARPU) and sales in the paid broadcasting business sector. Additionally, as the proportion of Giga Internet subscribers is increasing, the ultra-high-speed internet segment's performance is also expected to improve.

Along with this, due to the recently elevated social distancing measures, the ultra-high-speed internet environment is also changing, and it is expected to benefit depending on related trends.

Researcher Kim said, "With the increase in home internet usage, consumers seem to be subscribing to higher-rate plans to improve the home internet environment." He explained, "KT's Giga Wi, a product that adds a mobile Wi-Fi router to the existing wired Wi-Fi router, reportedly surpassed 100,000 subscribers within four months of its launch. The Giga Wi product charges a monthly fee ranging from 29,700 won to 45,100 won depending on the speed."

A favorable shareholder return policy is also an investment point. KT's dividend yield is expected to be slightly below 5%.

Researcher Kim said, "With the strengthening of shareholder return policies, including the announcement of a 300 billion won treasury stock repurchase on the 6th of last month, and increasing interest in year-end dividends, attention to KT's shareholder return policy strengthening will be raised."