[Click eStock] "SK Telecom, Top Pick in Telecommunications... Target Price Maintained"

Enhancing Corporate Value through Shareholder Return Policy from 2023
Expecting Top-Level Shareholder Profit Return in Korea... Sufficient Resources
Considering Dividends and Treasury Stock Cancellation, Highest Actual Yield among Telecom Companies

Hana Securities on the 18th designated SK Telecom as the top pick in the telecommunications services sector. They maintained a 'Buy' rating and a target price of 60,000 KRW. SK Telecom's closing price on the previous trading day was 53,100 KRW.

Researchers Hong-sik Kim and Yeon-su Ko of Hana Securities stated, "Although a shareholder value enhancement program was already established in 2023, the stock price increase was not significant due to a lack of investor interest. Considering the trends in headquarters' profits and cash flow, as well as subsidiary dividend inflows, it is highly likely that the current dividend payments and treasury stock buyback and cancellation will be maintained over the next five years. Given the scale of dividends and treasury stock buybacks relative to market capitalization, SK Telecom is expected to provide one of the highest levels of shareholder returns in the country." They added that although the value stock era is underway this year due to value-up programs, SKT's stock price has not yet risen significantly despite recording high dividend yields and conducting treasury stock buybacks and cancellations, indicating substantial room for further growth.

In 2023, SKT embarked on efforts to increase corporate value through shareholder return policies. Following dividend payments of 760 billion KRW, the company conducted treasury stock buybacks amounting to 300 billion KRW, of which 200 billion KRW worth of treasury stock was canceled. Researchers Kim and Ko noted, "The total shareholder return amounts to 960 billion KRW, combining treasury stock cancellations and dividend payments. The shareholder return policy is likely to continue through 2024 and 2025. Considering the increasing profit and dividend inflows from SK Broadband, there are sufficient funds for treasury stock buybacks."

As the value-up program materializes, stocks with genuinely high dividend yields and expected treasury stock cancellations, rather than low price-to-book ratio (PBR) stocks, are showing strong performance. The two researchers said, "For this reason, the stock price outlook for SKT is optimistic. When considering actual returns including dividends and treasury stock cancellations, SKT ranks at the top not only within the telecommunications sector but also across the entire domestic market." Based on 2024 estimates, the expected dividend yields for the three major telecom companies are SKT 6.4%, KT 5.0%, and LGU+ 6.4%. The actual expected returns considering dividends and treasury stock cancellations are projected at SKT 8.3%, KT 5.0%, and LGU+ 6.4%.