[Click eStock] "KT, Strong Q3 Earnings Growth Expected... Target Price Maintained"

2024 Operating Profit Expected to Grow 10%
ARPU Increase Likely to Drive Revenue Growth
Shareholder Returns in Focus, 2024 Dividend per Share 2,000 Won

Daishin Securities maintained a 'Buy' rating and a target price of 48,000 KRW for KT on the 12th. KT's closing price on the previous trading day was 38,100 KRW. The target price is based on the application of a price-to-earnings ratio (PER) of 10 to the expected earnings per share (EPS) of 4,984 KRW for 2024.

Kim Hoe-jae, a researcher at Daishin Securities, stated, "A PER of 10 times reflects the average level of the telecommunications industry over the past five years (based on KT and LGU+) and the average during the ARPU stagnation period from 2004 to 2011."

KT's revenue for the second quarter was 6.5 trillion KRW. While maintaining a similar level compared to the same period last year, operating profit (OP) decreased by 14% year-on-year to 490 billion KRW. Separate operating profit was 360 billion KRW, down 12% from the previous year. Notably, about 64 billion KRW of the 2024 wage increase was reflected in the second quarter, impacting the quarterly results. Excluding this, consolidated operating profit was 560 billion KRW, down only 3% year-on-year, and separate operating profit was 420 billion KRW, up 4% year-on-year, recording results in line with expectations.

Researcher Kim said, "Due to the advance recognition of expenses in the second quarter, a significant increase in third-quarter results is expected," adding, "Third-quarter operating profit is expected to increase by 38% year-on-year to 440 billion KRW, and fourth-quarter operating profit is also projected to rise by 38% year-on-year to 370 billion KRW." On an annual basis, operating profit for 2024 is expected to increase by 10% year-on-year to 1.8 trillion KRW. The rise in ARPU and the stable portfolio of wired and wireless businesses are expected to drive revenue growth.

In particular, Daishin Securities focused on KT's shareholder return policy. The expected DPS (dividend per share) is projected to increase to 2,000 KRW in 2024, 2,100 KRW in 2025, 2,200 KRW in 2026, and 2,300 KRW in 2027. The scale of shareholder returns is expected to reach 550 billion KRW in 2024 and 880 billion KRW in 2025.