[Click eStock] "KT Target Price Raised to 50,000 Won... Up 6.4%"

On the 6th, KB Securities raised KT's target stock price to 50,000 won while maintaining a buy rating.

KT's investment points lie in stable earnings growth through business efficiency driven by AI application, high growth in AI-related businesses such as data centers and cloud services, and expectations surrounding the announcement of a value-up program. In particular, the potential inflow of shareholder returns from next year's real estate subsidiary's sales profits is drawing attention as it coincides with the value-up program. The newly suggested target price represents a 6.4% increase compared to the previous level.

Amid concerns about an economic slowdown, KT is expected to continue stable earnings growth through business efficiency. This is due to the downward stabilization of costs that account for a large portion of the telecommunications industry, such as depreciation, labor costs, and marketing expenses. Regarding depreciation, the depreciation period for the large-scale 5G equipment investment made in 2018 has ended, so a noticeable decline is expected from the second half of the year. Additionally, labor costs continue to decrease due to the annual large-scale retirement of employees. Meanwhile, KT is confirmed to be executing efficient marketing expenses by utilizing technologies such as AI. As major costs stabilize downward, KT's defensive characteristics against economic downturns are expected to be highlighted.

KT Estate, a subsidiary, is developing the site of KT's former Jayang-dong telephone exchange, with completion scheduled for January 2025. The site will include a hotel (150 rooms) as well as 1,063 residential units (including rental apartments and officetels). Within one month of subscription, 100% of the 631 units available for general sale were contracted. As profits from this development project are expected to flow in next year, and KT has expressed its intention to participate in the value-up program, expectations are rising regarding potential benefits such as shareholder returns from the profits of this development project.

KB Securities researchers Junseop Kim and Seongwon Cha said, "While AI-related disappointments have become a hot topic in the market day after day, KT's AI-related business, such as the data center business, has a stable nature, so the earnings risk is relatively lower," adding, "Even if AI growth expectations become a hot topic in the capital market again, it is expected to minimize volatility risk."