[Click eStock] "KT, Continued Performance Improvement"

Korea Investment & Securities "KT Target Price Maintained at 37,000 Won"
Expecting Future M&A and Media Sector Growth

[Asia Economy Reporter Gong Byung-sun] KT is evaluated to have achieved balanced growth in the first quarter of this year. Sales increased in all sectors except real estate. On the 12th, Korea Investment & Securities maintained a target price of 37,000 KRW and a 'Buy' investment rating for KT.

KT's first-quarter performance this year exceeded market expectations (consensus). First-quarter sales reached 6 trillion KRW, up 3.4% compared to the same period last year, and operating profit increased by 15.9% to 444.2 billion KRW. Operating profit exceeded consensus by 15%. This was because sales increased in all sectors except real estate, and marketing costs decreased by 1.8% compared to the same period last year due to eased competition among telecom operators. As the deficit of K-Bank also narrowed, non-operating profit and loss successfully turned positive.

Wireless service sales amounted to 1.7 trillion KRW, up 2.2% compared to the same period last year. Tae-wan Oh, a researcher at Korea Investment & Securities, explained, "This is because the number of subscribers increased by 2.1% year-on-year and the average revenue per user (ARPU) also rose by 0.2%." IPTV sector sales also increased by 6.8% year-on-year to 446.2 billion KRW, as both subscriber growth and ARPU slightly increased.

Fixed-line telephone sales rebounded. Although this sector had been declining in the long term, it recorded 377.3 billion KRW, up 1.3% year-on-year, due to a slowdown in home phone cancellations and an increase in corporate internet phone subscriptions. Business-to-business (B2B) sales rose 2.3% year-on-year to 684.2 billion KRW, driven by high growth in artificial intelligence (AI) and digital transformation (DX) sectors. Group company sales also increased by 5.8% to 2.4 trillion KRW. Researcher Oh said, "Recovery was realized mainly through content subsidiaries and BC Card."

The performance improvement trend is expected to continue. Researcher Oh said, "With the increase in 5G subscribers and eased marketing competition sustaining strong wireless performance, a re-rating is expected due to digital transformation and expansion of the media value chain." Korea Investment & Securities forecast KT's operating profit this year to increase by 24.7% year-on-year to 1.5 trillion KRW.