[Click e Stocks] "KT, a Stock to Watch During Dividend Season"

[Asia Economy Reporter Song Hwajeong] Hanwha Investment & Securities maintained its 'Buy' rating and target price of 42,000 KRW for KT on the 19th, noting that attention should be paid to dividend increases following improved earnings.

KT's third-quarter earnings this year are expected to be solid despite the reflection of one-time costs. Hanwha Investment & Securities forecast that KT's consolidated third-quarter results will record sales of 6.2 trillion KRW and operating profit of 348.8 billion KRW, in line with previous estimates. Researcher Lee Sunghak of Hanwha Investment & Securities said, "The previously concerning increase in marketing expenses was limited, but it is estimated that about 90 billion KRW in one-time costs were reflected due to the settlement of wage and collective bargaining (wage and collective agreement)." He added, "Despite the rise in costs, operating profit grew 19% year-on-year, indicating that the earnings improvement trend is being maintained."

Dividends are also expected to increase along with earnings improvement. KT has stated that it will pay 50% of adjusted net income on a separate basis as dividends as part of its mid- to long-term dividend policy. The researcher said, "KT's annual operating profit this year is expected to reach 1.5 trillion KRW barring any surprises. Since the expected separate operating profit is projected to grow by 35% this year, based on this calculation, a dividend per share of 1,700 to 1,800 KRW will be paid." He analyzed, "The dividend yield based on the current stock price reaches 5.6%, making it a stock to watch during the dividend season."

Next year, new business performance is also expected to become full-fledged. Since KT adopted the slogan of transforming into a 'DIGICO (Digital Platform Company),' the core of its growth has shifted. With AI (Artificial Intelligence), DX (Digital Transformation), finance, and media businesses becoming the main pillars, it has moved into growth industries desired by the market. The researcher said, "After strong performance in the first half, there was a stock price correction, which was due to the decline in the KOSPI. Unlike in the past, telecom stocks have not played a defensive role in a falling market." He added, "Ultimately, investment decisions are made based on whether earnings improve and whether future growth businesses exist. Next year, along with core business growth, results from new businesses are expected to appear in earnest."