Hana Securities announced on the 6th that it maintains a buy rating and a target price of 40,000 KRW for KT. However, this is based on an investment period of one year. It noted that there is a low likelihood of a strong stock price rebound over the next three months, and in the event of potential risks such as large-scale voluntary retirement and book cleansing, there is a possibility of a temporary sharp decline in the stock price. Therefore, it recommended maintaining a conservative investment stance until the end of the year.
Considering KT's operating profit consensus, it is highly likely that foreign investors will sell shares amid downward revisions of profit forecasts in the second half of the year. Accordingly, it advised that there is no need to buy KT shares above 33,000 KRW.
Kim Hong-sik, a researcher at Hana Securities, said, "Even if KT pays dividends the same as last year, at a stock price of 33,000 KRW, the expected dividend yield is only 5.9%. While competitor SKT is expected to grow its dividend per share (DPS) by 2-3% annually through share buybacks, KT's DPS growth is uncertain, yet its expected dividend yield is 1% lower than SKT's." He added, "Although foreign buying is currently supporting the stock amid upward revisions of profit forecasts, it is questionable whether this trend will continue in October."
He analyzed that if KT undergoes restructuring, a large-scale payment of voluntary retirement benefits will inevitably damage dividends. Researcher Kim stated, "Since CEO Kim Young-seop took office, organizational restructuring has been intensifying. If voluntary retirement is implemented amid slimming down and consolidation of the organization, the previously anticipated sharp decline in KT's profits and dividend cuts could become a reality."
Nine years ago, KT conducted a large-scale voluntary retirement program, and the one-time personnel expenses of 1.2 trillion KRW were reflected as operating costs. If voluntary retirement is implemented this time, personnel expenses ranging from at least 500 billion KRW to up to 1.5 trillion KRW are likely to be recorded as current expenses, probably reflected in the fourth quarter of this year. This is because CEO Kim Young-seop, whose term runs until March 2026, has no reason to jeopardize the important 2024 performance from his perspective.
Researcher Kim said, "When a capable new KT CEO appeared, investors initially welcomed him, but when the increase in operating costs due to organizational slimming and the disposal of unprofitable businesses, along with temporary dividend reductions, were mentioned, their attitude changed completely." He pointed out that this is because, although the company will become better in the long term, the immediate disadvantages are unwelcome. He emphasized, "The current KT stock price does not reflect the risks that may arise in the future, and it is necessary to consider bottom-fishing again when risks are highlighted once more."
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