[Click eStock] "Dividend Growth in Focus... SKT, Target Price Maintained"

Hana Securities maintained a buy rating and a target price of 70,000 KRW for SK Telecom (SKT) on the 29th, stating that "amid a favorable earnings trend, the dividend per share (DPS) is showing an upward trend." The closing price on the previous day was 57,300 KRW.

On the same day, Hong-sik Kim, a researcher at Hana Securities, stated, "Considering the continuous long-term DPS growth potential, the current expected dividend yield of 6.5% is too high."

Recently, SKT's DPS has been steadily increasing. It rose from 3,320 KRW in 2022 to 3,540 KRW last year, and is expected to reach 3,800 KRW this year. Researcher Kim emphasized, "Given the characteristic of telecom stocks where the stock price rises in proportion to DPS growth, SKT's stock price upward trend is expected to continue. The recent rise in SKT's stock price is fundamentally driven by expectations of long-term DPS growth and high dividend yields. It is time for the stock price to reflect the long-term DPS growth trend."

He added, "Although there may be temporary supply-demand outflows after the year-end dividend season, discussions on new 5G plans will intensify following the new frequency auction in the second half of next year. This creates an environment where SKT can be recognized as a promising investment next year. When KT's foreign ownership limit is reached, foreign buying pressure may strengthen for SKT."

The third-quarter earnings to be announced on the 6th of next month are also expected to be at a favorable level, in line with the market consensus. The earnings volatility due to voluntary retirement is expected to be limited. Researcher Kim said, "The consolidated operating profit for the fourth quarter is expected to decrease slightly compared to the same period last year, and the annual consolidated operating profit for this year is expected to reach 1.817 trillion KRW, a 4% increase from the previous year." He added, "A two-year paid leave program has been in operation for two years already. Therefore, earnings volatility caused by sudden increases or decreases in labor costs will not be significant."