[Click eStock] "KT to Deliver Even Better Q2 Results... Room for Further Dividend Expansion"

On April 30, Hana Securities named KT as its top pick in the telecommunications services sector, citing a clear improvement in this year's performance and a high likelihood of dividend expansion. The firm maintained its "Buy" rating and target price of 70,000 won.

Kim Hongsik, a researcher at Hana Securities, stated, "KT's consolidated operating profit for the second quarter is expected to reach 970.8 billion won, up 97% year-on-year and 44% higher than in the first quarter." He added, "While the first quarter results will also be strong, it is highly likely that KT's impressive performance will continue into the second quarter."

Although some are concerned about a possible share price correction following the first-quarter earnings announcement, the analysis suggests that the strong upward trend may persist. Kim explained, "Seventy-five percent of KT's apartment pre-sale profits are expected to be recognized in the second quarter, and from a cost perspective, the second quarter should be even better than the first." He further predicted, "As investors' expectations for KT to achieve 2.6 trillion won in consolidated operating profit this year rise, the share price is also likely to increase."

There is also sufficient capacity for dividend expansion. In fact, KT raised its first-quarter DPS (dividend per share) by 20% to 600 won. Kim analyzed, "Given the strong performance, the DPS could rise to 700 won in the second or third quarter. If KT distributes 50% of its parent company net profit as dividends, the annual DPS could reach as high as 2,800 won."

He noted, "Management is showing a strong commitment to enhancing value, as evidenced by its willingness to adjust DPS in consideration of the dividend yield." He forecasted, "Even after next month's first-quarter earnings announcement, the share price is highly likely to continue its upward trajectory."