[Click eStock] "KT Enters Long-Term ARPU Growth Cycle"…Target Price Up 16%

[Asia Economy Reporter Ji Yeon-jin] Daishin Securities announced on the 12th that it has raised its earnings per share (EPS) forecast for KT and increased the target stock price by 16% to 46,000 KRW, as KT has entered a long-term upward cycle in average revenue per user (ARPU).

KT's revenue in the fourth quarter reached 6.5 trillion KRW, a 4% increase compared to the same period last year, and operating profit is estimated to have surged by 116% to 360 billion KRW. Before reflecting one-time factors such as compensation (revenue deduction) for the telecommunication network outage that occurred in November last year and year-end bonuses, the operating profit is estimated to be around 130 billion KRW.

As of November last year, the 5G penetration rate was 43.1%, maintaining the top position for 18 consecutive months and further widening the gap with competitors. The increase in penetration rate is leading to improvements in ARPU. Wireless ARPU is expected to increase by 1% year-on-year to 3.23 trillion KRW, maintaining the number one position continuously since the first quarter of 2019.

KT has formed a mobile partnership with Disney+ and is showcasing original content starting with 'Crime Puzzle' through Studio Genie, which is expected to contribute to the rise in KT's ARPU.

KT's stock price rose by 37% as of the day before the ex-dividend date last year, outperforming competitors such as SKT with 29% and LGU+ with 20%. This significantly exceeds the KOSPI's 5% increase. Kim Hoe-jae, a researcher at Daishin Securities, explained, "The reason for KT's strong stock price is profit improvement due to ARPU growth and a high dividend policy. Telecommunications generate stable earnings without major fluctuations, so the stock price reacts more to growth prospects than to earnings. Despite business diversification, wireless remains the largest segment, and KT's high market share and high ARPU in 5G, the growth engine of wireless, are the background of the stock price strength."

Last year, KT's dividend per share (DPS) was 1,700 KRW, and 2,000 KRW is expected this year.