[Click eStock] KT and LG Uplus, Mechanical Buy Response at Current Stock Prices

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment advised on the 20th to engage in mechanical buying of telecom stocks, focusing on KT and LG Uplus.

Kim Hong-sik, a researcher at Hana Financial Investment, stated, "Even investors who are not interested in dividend investments at this point should consider mechanical buying of telecom stocks centered on KT and LG Uplus," adding, "Once the third-quarter earnings are revealed, the consensus forecast for this year's telecom companies' dividend per share (DPS) is likely to be KRW 1,600?1,800 for KT and KRW 550?600 for LG Uplus. Based on current stock prices, the expected dividend yields would reach 5.1?5.8% for KT and 3.8?4.1% for LG Uplus." He emphasized, "These are all historically the highest expected dividend yields, and considering the recent upward trend in DPS, this is an absurdly undervalued phase," further adding, "Dividends are growing rapidly."

The combined operating profit of the three domestic telecom companies' headquarters is expected to grow by 20% to KRW 854.1 billion in the third quarter, and the cumulative operating profit of the three companies' headquarters up to the third quarter is forecasted to increase by 22% year-on-year to KRW 2.706 trillion. Given this, investors' expectations for an increase in telecom companies' DPS during the third-quarter earnings season are likely to rise. Except for SKT, dividend payout ratios are not high, and LG Uplus is in a situation with a high possibility of an upward revision, as telecom sector profits are surging. Even conservatively, KT and LG Uplus are expected to see DPS increases of 20?30%.

Researcher Kim said, "From an investment strategy perspective, I recommend short-term concentrated buying of LG Uplus and mid- to long-term concentrated buying of KT," explaining, "Since the earnings announcements of the three telecom companies are scheduled for early November, short-term investments will inevitably consider third-quarter results. LG Uplus is expected to have the best apparent third-quarter performance, and the timing is right for increased expectations of a higher dividend payout ratio." On the other hand, KT is judged to be promising for mid- to long-term investment. Considering the DPS trend and expected dividend yield, its investment attractiveness is higher than in any past phase, and in terms of content, it is highly likely to achieve results exceeding this year's expectations.