[Click e-Stock] "KT Expected to Achieve Record-High Operating Profit This Year... Target Price Raised"

Target Price Raised from 58,000 Won to 63,000 Won

On May 12, SK Securities raised its target price for KT from 58,000 won to 63,000 won, projecting that the company will achieve record-high operating profit this year. The investment opinion was maintained at 'Buy'.

Choi Kwansoon, a researcher at SK Securities, stated, "We raised the target price by revising up this year's earnings estimates," adding, "There is high visibility for earnings improvement, as we expect KT to post its highest-ever operating profit this year. In addition, the annual shareholder return rate of 6.5% compared to the current share price serves as a strong support for the stock price."

In the first quarter of this year, KT reported operating revenue of 6.8451 trillion won, up 2.9% year-on-year, and operating profit of 688.8 billion won, up 36%. Choi explained, "While wireless and wireline sales grew by 1.0% and -0.8%, respectively, resulting in somewhat limited growth in the telecommunications segment, the inclusion of one-off revenue from apartment pre-sales enabled KT to exceed consensus (the average of securities firms' forecasts)." He further analyzed, "Additional revenue from apartment pre-sales will be reflected in the second quarter, and KT's annual operating profit is expected to reach a record high this year, thanks to labor cost reductions from restructuring and improved cost efficiency."

In addition to earnings improvement, enhanced shareholder returns are also cited as a positive factor for the stock price. In February, KT began repurchasing its own shares through a 250 billion won treasury stock trust contract. Choi noted, "About 40% of the planned repurchase volume has been completed so far, and the repurchase is scheduled to continue until August 13. All repurchased shares will be canceled." He added, "KT also raised its first-quarter dividend by 20% to 600 won. Including both the share repurchase and the dividend, KT's annual shareholder return rate compared to the current share price amounts to 6.5% this year."

There is an opinion that there is ample room for further stock price appreciation. Choi emphasized, "High earnings visibility and favorable shareholder returns provide sufficient grounds for further upside, even though KT's share price has already risen 17.4% since the beginning of the year."