[Click eStock] "KT, Stock Price Should Rise Significantly Based on Fundamentals"

Hana Securities evaluated on the 20th that KT's stock price should significantly rise based on its current fundamentals. They maintained a 'Buy' investment rating and a 12-month target price of 60,000 KRW.

Hong-sik Kim, a researcher at Hana Securities, forecasted that KT's consolidated operating profit will exceed 1 trillion KRW in the first quarter of next year and surpass 2.5 trillion KRW annually. He explained, "Although the fourth quarter of this year is expected to record a large-scale deficit due to severance payments and transfer compensation for subsidiaries, the first quarter of next year will see the highest-ever quarterly consolidated operating profit," adding, "This is because the headquarters' operating profit will surge due to reduced labor costs, and profits from apartment sales by the real estate subsidiary are expected to be recorded."

He continued, "The annual performance outlook for next year is also bright, primarily because the effect of reducing operating expenses will be significant, and one-time profit and loss forecasts are positive," and said, "Although the growth of mobile phone sales revenue will continue to slow due to a sharp decline in net 5G subscribers, operating expenses are expected to stabilize downward due to the absence of marketing events amid continued capital expenditure (CAPEX) reductions through the first half of the year."

Researcher Kim assessed that considering the expected shareholder returns next year, the current stock price is excessively low. He stated, "The amount of shareholder returns, which was only 500 billion KRW last year, increased to around 700 billion KRW this year and is expected to rise to 900 billion KRW next year," adding, "Fundamentals have improved so that the headquarters' operating profit reaches 1.8 trillion KRW and net profit 1.35 trillion KRW; assuming a dividend payout ratio of 50%, the annual dividend amount will approach 700 billion KRW." He further noted, "Considering the foreign ownership limit, there will be physical difficulties in treasury stock cancellation for the time being, but treasury stock purchases are expected to exceed 200 billion KRW annually."