[Click eStock] "SKT, Earnings Improvement and Dividend Expectations Rise... Target Price Maintained"

Q3 Earnings Likely to Sustain Growth
Increased Confidence in Dividends and Earnings Improvement
Stable Growth in Wired and Wireless Communication Sectors

On the 15th, SK Securities evaluated SK Telecom's third-quarter earnings as stable with no surprises. They maintained a 'Buy' rating and a target price of 69,000 KRW, stating that future earnings improvement and dividends are sufficiently attractive. SK Telecom's closing price on the previous trading day was 56,300 KRW.

Choi Gwan-soon, a researcher at SK Securities, said, "The wired and wireless communication sectors, including mobile phones and IPTV, are growing steadily, and it is estimated that the efficient cost execution trend continued into the third quarter." He added, "In particular, expectations for AI-related revenue expansion are increasing through the Perplexity subscriber promotion."

According to SK Securities, SK Telecom's third-quarter 2024 earnings are expected to show revenue of 4.491 trillion KRW, a 2.0% increase year-on-year. Operating profit is projected to reach 523.7 billion KRW, marking a 5.2% increase. The operating profit margin is expected to be 11.7%, aligning with the operating profit consensus of 523.8 billion KRW, thanks to the stabilization of major costs such as marketing expenses and depreciation without one-time factors.

Additionally, SK Telecom is expected to announce a value-up disclosure plan to enhance corporate value within the year. According to the shareholder return policy announced last April, from 2024 to 2026, more than 50% of the adjusted consolidated net income will be allocated for shareholder returns. The existing dividend policy is likely to be maintained. Focus is also expected on capital efficiency, including return on equity (ROE).

Researcher Choi said, "While profitability improvement through efficient cost execution and Operation Improvement (OI) is anticipated, it is judged that large-scale investments such as network CAPEX and AI investments have been completed." He added, "In particular, from 2025, AI sector revenue is expected to become visible, and if capital efficiency measures such as ROE improvement through value-up disclosures are materialized, additional stock price increases are expected."