[Click eStock] "Undervalued High Dividend... LG Uplus, Target Price Maintained"

Daishin Securities maintained a buy rating and a target price of 13,000 KRW for LG Uplus on the 14th, stating that "although its profit attractiveness is lower compared to competitors, shareholder returns and valuation (stock price relative to corporate value) are attractive." The closing price on the 11th was 9,740 KRW.

On the same day, Kim Hoe-jae, a researcher at Daishin Securities, said, "LG Uplus's dividend policy from this year through 2026 is to pay out more than 40% of separate net income, and at least guarantee last year's dividend per share (DPS) of 650 KRW. We expect a DPS of 650 KRW this year, with a yield of 6.6%. At the current stock price level, this is the highest yield among the three companies."

The target price is based on this year's expected earnings per share (EPS) of 1,332 KRW and a price-earnings ratio (PER) of 10 times. Operating profit for this year is expected to decrease by 2% compared to the same period last year, to 980 billion KRW. Researcher Kim said, "With the completion of the IT system for frequency acquisition in 2022 and marketing efficiency, depreciation expenses will increase by about 80 billion KRW annually, causing overall profits to stagnate this year," adding, "Next year, as the depreciation burden decreases, profits are expected to return to the 1 trillion KRW level."

Researcher Kim noted, "In the value-up strategy to be announced next month, although the scale may not be large, additional shareholder returns such as share buybacks and cancellations could be included, which is an investment point," and added, "This year's PER is 7.3 times, the lowest level in the past 10 years. There is no valuation burden."

Third-quarter sales are expected to increase by 3% year-on-year to 3.7 trillion KRW, and operating profit is forecast to rise by 2% to 260 billion KRW. Researcher Kim explained, "Sales by segment are 1.5 trillion KRW for wireless services, 660 billion KRW for business-to-consumer transactions (ultra-high-speed internet, Internet TV, etc.), and 480 billion KRW for business-to-business transactions (data centers, solutions, corporate communications, etc.)."

He added, "The average revenue per user (ARPU) per wireless subscriber is expected to decrease by 6% year-on-year to 25,600 KRW, but the ARPU for mobile phones excluding Internet of Things (IoT) lines is expected to increase by 1% to 35,500 KRW." Third-quarter marketing expenses are expected to decrease by 2% to 540 billion KRW, accounting for 19.6% of sales, which is below the post-5G introduction average of 22.3%.