[Click eStock] "LG Uplus, Second Half Earnings Expected to Recover... Should Seize Low-Price Buying Opportunity"

[Asia Economy Reporter Lee Myunghwan] Hana Securities announced on the 15th that it maintains a buy rating and a target price of 20,000 KRW for LG Uplus. The firm also advised that the current stock price should be seen as a buying opportunity due to the expected recovery in performance in the second half of this year.

Hana Securities' analysis suggests that the possibility of a decline in LG Uplus's operating profit this year is not significant. LG Uplus showed a decrease in operating profit in the first half of this year compared to the same period last year, raising some concerns about its performance. However, Hana Securities pointed out that the company is expected to show a clear trend of performance improvement starting from the third quarter, with operating profit growth in the fourth quarter projected to be higher than the same period last year. The poor results in the first and second quarters were largely due to sluggish sales, a negative base effect, and the impact of one-time costs. In contrast, the third and fourth quarters are expected to have a low base and minimal one-time costs. The growth rate of service revenue is also expected to expand.

Dividend yield is also anticipated to be favorable. Earlier, LG Uplus decided on an interim dividend of 250 KRW this year. Considering LG Uplus's dividend payment policy of a 40% interim and 60% year-end structure, Hana Securities expects the total dividend to likely be 650 KRW. This represents an 18% increase compared to last year. They also noted that LG Uplus's expected dividend yield of 5.8% is historically the highest.

Hana Securities forecasts that LG Uplus's revenue trend will gradually improve after bottoming out in the first quarter of this year. The first half of this year showed signs of growth slowdown, with 5G net subscriber additions slowing and mobile phone revenue growth rate limited to 2%. However, Hana Securities expects growth of 3% and 3.5% in the third and fourth quarters respectively compared to the same periods last year. This is attributed to a slowdown in the decline of mobile subscribers and an increase in net 5G subscriber additions.

Hana Securities anticipates that as LG Uplus's revenue growth expectations increase toward the second half of this year, perceptions of undervaluation will spread. Researcher Kim Hongsik of Hana Securities stated, "The stock price weakness of LG Uplus stems from a lack of confidence in future performance improvement," and advised, "With the third-quarter earnings announcement, investment sentiment is expected to recover, so it is recommended to use this as a buying opportunity."