[Click eStock] KT Shares Earnings Improvement with Shareholders "Low Possibility of Dividend Damage"

Daishin Securities maintained a buy rating and a target price of 400,000 KRW for KT on the 12th, sharing with shareholders the steady improvement in performance and stating that the possibility of significant damage to the dividend policy is low. This opinion contrasts with Hana Securities' earlier analysis, which suggested that KT's dividend policy would inevitably be damaged due to large-scale voluntary retirement payments resulting from potential restructuring.

Kim Hoe-jae, a researcher at Daishin Securities, pointed out, "KT has no plans for large-scale restructuring, no plans for major capital expenditures (CAPEX) until the expected launch of 6G around 2030, and its performance is steadily improving based on excellent fundamentals. Therefore, the possibility of significant damage to the dividend policy recently demonstrated is considered low."

Since its privatization in 2002, KT has maintained a policy of a dividend payout ratio of over 50% or a minimum dividend per share (DPS) of 2,000 KRW. This policy was maintained for 10 years but was effectively suspended after poor performance during the early LTE commercialization phase due to frequency reuse issues and the inability to pay dividends following large-scale restructuring in 2014. Subsequently, without a clear policy, dividends gradually increased in line with performance improvements: DPS of 500 KRW in 2015, 800 KRW in 2016, 1,000 KRW in 2017, and 1,100 KRW in 2018-2019. The average payout ratio during this period was 42%.

In 2020, the new CEO proposed a dividend policy with a payout ratio of over 50% for a three-year term. Rather than a new policy, this was a formal reaffirmation of the promise made 20 years ago as profits normalized. Researcher Kim said, "It is not because a new CEO was appointed this year, but because the validity period of the previous dividend policy has expired, a new dividend policy is expected to emerge." He added, "Once internal organizational restructuring and personnel changes are completed, early November, around the third-quarter earnings season, will be the right time to present future roadmaps and shareholder return policies such as dividends." He noted that the policy could be aligned with the CEO's term or could be independent of it.

Researcher Kim assessed, "SK Telecom has a fixed dividend but with a payout ratio around 80%, and LG Uplus raised its mid-to-long-term payout ratio from 30% to over 40% starting in 2022," concluding that "the possibility of KT's dividend payout ratio decreasing is low."