[Click eStock] "LG Uplus, Absolutely Undervalued Compared to Dividend Payout Ratio"

[Asia Economy Reporter Kwon Jaehee] Hana Securities maintained its 'Buy' rating and a target price of 20,000 KRW for LG Uplus on the 15th.

LG Uplus has recently shown a high growth rate in dividends per share (DPS). It was 22% in 2021 and 18% in 2022. This is due to both high profit growth and an upward revision of the dividend payout ratio. The DPS for 2023 is expected to grow 15% year-on-year to 750 KRW.

Kim Hongsik, a researcher at Hana Securities, stated, "Considering recent earnings trends and dividend flows, a 100 KRW increase seems reasonable, but on the other hand, LG Uplus's stock price remains excessively low," adding, "This is because despite showing dividend growth of over 10% annually, the expected dividend yield reaches 6.8%."

[Image source=Yonhap News]

Kim also added, "A flexible stock price increase is expected along with resolving supply and demand issues."

In terms of dividend potential, LG Uplus is analyzed to be significantly higher than KT. Based on this year's estimated earnings, the expected dividend yields for the three major domestic telecom companies are 7.0% for SKT, 6.0% for KT, and 6.8% for LG Uplus. In the telecom sector, stock price increases typically precede dividend growth. LG Uplus's current dividend payout ratio is only 42%. In the long term, it can rise to 50%, indicating that its dividend growth potential is absolutely the highest among the three telecom companies.

Kim said, "I consider LG Uplus the top pick in the telecommunications services sector," adding, "Considering dividend growth rate, expected dividend yield, and profit scale, it is in an absolutely undervalued state."