[Click eStock] KT, CEO Vacancy Becomes Reality "System Remains Robust"

Daishin Securities announced on the 28th that it is downgrading its investment opinion on KT to Buy and lowering the target price from 52,000 KRW to 44,000 KRW. This decision is based on the judgment that the CEO vacancy will persist for a considerable period due to the voluntary resignation of CEO candidate Yoon Kyung-rim. However, the company’s system is assessed to be robust. Given KT’s stable infrastructure and system, the impact on performance is expected to be limited, so the Buy rating is maintained. Additionally, with the ongoing restructuring of the 5G mid-tier plans, the investment environment in the telecommunications sector is expected to improve compared to February and March.

Kim Hoe-jae, a researcher at Daishin Securities, stated, “Considering the establishment of a new board of directors, governance committee, CEO evaluation committee, the recruitment and screening of internal and external candidates, and the shareholder meeting, as well as communication with external stakeholders, it is judged that appointing a CEO within the first half of the year is unrealistic.” He added, “Even after appointing a CEO, it will take at least one quarter to establish a three-year strategy, and since most companies start setting their 2024 management goals from November, KT will effectively have to operate solely on its system without a top decision-maker this year.”

However, KT’s strong performance in 5G over the past three years and improvements in various fields such as media, content, and business-to-business (B2B) transactions have contributed to a significant stock price increase relative to the index in 2021 and 2022, which is attributed to KT’s stable system.

The telecommunications industry is currently undergoing a restructuring of 5G mid-tier plans. Last week, SK Telecom launched 25 new plans, including four types of 5G mid-tier plans priced between 62,000 and 68,000 KRW offering 37 to 99GB. KT and LG Uplus are also expected to release similar plans by May at the latest. Researcher Kim said, “As consumers have a wider range of data usage options, demand for both lower and higher-tier plans will actively emerge. However, considering recent inflationary pressures, demand for lower-tier plans will appear first.” He forecasted that the average revenue per user (ARPU) will be neutral in the mid-term and rise in the long term.