[Click eStock] "KT, Time to Seek Stock Price Rebound After Ex-Dividend Date"

NH Investment & Securities Report

[Asia Economy Reporter Minji Lee] NH Investment & Securities maintained a buy rating on KT on the 10th. The target price was lowered by 3.8% to 50,000 won due to weak fourth-quarter earnings.

Fourth-quarter revenue is expected to be 6.6 trillion won, and operating profit 155 billion won, down 0.9% and 58% respectively compared to the same period last year. Operating profit is expected to fall short of the market consensus of 237.2 billion won.

The wireless business is estimated to have increased by 1.6% year-on-year to 1.56 trillion won. This is due to a stable rise in ARPU driven by the increased adoption rate of 5G. Growth in the Digico business and the performance of subsidiaries were also favorable. Despite the launch of the iPhone 14, selling expenses decreased by 1% year-on-year, maintaining stability. Due to the impact of labor-management negotiations, a temporary increase in labor costs (150 billion won) is reflected, and seasonal cost increases in the fourth quarter are expected to raise overall operating expenses.

Ahn Jae-min, a researcher at NH Investment & Securities, said, “Last year’s interest rate hikes reduced the attractiveness as a dividend stock, and the stock price has been adjusted due to issues such as the reappointment of the CEO and the National Pension Service.” He added, “However, considering the stable performance of telecom stocks and growth in non-telecom businesses such as content and real estate, KT’s strengths are expected to be highlighted this year.” KT’s total operating profit for this year is forecasted to grow 9% year-on-year to 1.85 trillion won.