[Click eStock] "LG Uplus, Operating Profit Growth Turnaround from Q4... Target Price Up"

Target Price Raised from 11,500 Won to 13,500 Won

On the 25th, SK Securities raised the target price for LG Uplus from 11,500 KRW to 13,500 KRW, anticipating that operating profit will return to an upward trend starting from the fourth quarter of this year.

Choi Gwan-soon, a researcher at SK Securities, explained, "The minimum cash dividend of 650 KRW provides a solid downside support for the stock price, and the possibility of canceling treasury shares held or additional treasury share repurchases is open, increasing the potential for enhancing corporate value." He added, "Although profit growth had been sluggish compared to competitors, reflected in the weak stock price, there is a high likelihood of a turnaround to an operating profit uptrend from the fourth quarter, so the stock price is also expected to rebound."

LG Uplus is expected to see operating profit turn to an increase in the fourth quarter for the first time in six quarters. Researcher Choi said, "LG Uplus's fourth-quarter performance is expected to show sales of 3.82 trillion KRW, a 0.1% increase year-on-year, and operating profit of 208.6 billion KRW, up 6.7%. The decline in operating profit caused by amortization expenses of intangible assets due to software investments in Q4 2023 is likely to turn around." He added, "Cost efficiency measures will continue in 2025, leading to an annual operating profit increase for the first time in three years."

On the 22nd, LG Uplus announced plans to enhance corporate value. It selected return on equity (ROE) and shareholder return ratio as key indicators, setting mid-to-long-term targets of 8-10% ROE and 40-60% shareholder return ratio. The company plans to achieve the ROE target through AI data center construction, expansion of digital distribution, and cost improvements from AI application within the company. Regarding shareholder returns, according to the dividend policy announced in February for 2024-2026, LG Uplus will maintain a minimum annual dividend of 650 KRW while returning more than 40% of net income on a separate basis (excluding one-time and non-recurring gains) to shareholders, and additionally pursue treasury share repurchases of 0-20% of net income. Furthermore, the company will review the full or partial cancellation of 6.78 million treasury shares (1.6%) purchased in 2021. Researcher Choi said, "If the cancellation of treasury shares held and additional treasury share repurchases are realized, it is expected to be an opportunity to enhance corporate value."