[Click eStock] "LGU+, Excessive Undervaluation... Time to Start Dividend Investment"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment stated on the 22nd that LG Uplus is excessively undervalued considering this year's sales, profit growth rate, and expected dividend yield level, maintaining a buy investment opinion and a target price of 18,000 KRW.

Kim Hong-sik, a researcher at Hana Financial Investment, said, "LG Uplus is expected to achieve high operating profit growth this year due to strong cost control along with high mobile phone sales growth," adding, "Considering the profit growth rate and dividend payout ratio, this year's dividend per share (DPS) is expected to be at least 550 KRW and up to 600 KRW."

After LG Uplus announced its treasury stock acquisition, the expectation for a merger with HelloVision was reflected, causing HelloVision's stock price to surge. However, according to researcher Kim, the recent surge in HelloVision's stock price makes the possibility of a short-term merger between LG Uplus and HelloVision unlikely. He explained, "There is no legal issue for LG Uplus to control the media company HelloVision for the time being, and since it is still early in the acquisition, it is not yet a situation where synergies between the two companies after the M&A can be expected," adding, "Due to the HelloVision stock price surge, the merger ratio is unfavorable to LG Uplus, so immediate promotion is unlikely." Moreover, since LG Uplus's treasury stock acquisition scale is only about 100 billion KRW, the timing for merger promotion is not imminent.

The recently emerging possibility of a partnership with Disney is expected to be a positive factor not only for HelloVision but also for LG Uplus. Through content enhancement, subscriber attraction and an increase in average revenue per user (ARPU) can be anticipated.

LG Uplus recently announced through a disclosure that it will start interim dividends from this year. The interim dividend is expected to be set at about 40% of the total dividend. If held until June this year, a dividend of 200 KRW per share is expected. Researcher Kim said, "Due to the recent short-term stock price decline, the interim dividend yield is expected to be 1.4%, and combined with the year-end dividend, the expected dividend yield reaches 3.7%," adding, "Considering that the second-quarter earnings will also be excellent, I recommend securing the interim dividend by June before entering the earnings season and then facing the earnings season."