[Click e-Stock] "LG Uplus, Solid Wireless Revenue Growth Rate"

Target Price Raised from 14,000 Won to 16,000 Won

Korea Investment & Securities announced on June 12 that it has raised its target price for LG Uplus from 14,000 won to 16,000 won, citing positive factors for stock price volatility such as profit improvement, increased foreign investor inflows, and expanded shareholder returns. The investment rating remains 'Buy'.

According to statistics from the Ministry of Science and ICT released in March, prior to SK Telecom's hacking announcement, the number of 5G subscribers for the three major telecom companies was 17.2 million for SK Telecom, 10.5 million for KT, and 8.2 million for LG Uplus. However, the monthly net increase in 5G subscribers ranks in the order of SK Telecom > LG Uplus > KT, which is because LG Uplus has the lowest 5G penetration rate at 74.8% (KT 78.9%, SK Telecom 75.9%). The month-on-month growth rate is also higher than its competitors.

Kim Jungchan, a researcher at Korea Investment & Securities, explained, "This is because the total number of subscribers is smaller, but it also means that there is greater potential for improvement in wireless ARPU (average revenue per user) due to the rising 5G penetration rate compared to competitors. The impact of MNO subscriber churn due to the growth of the MVNO (Mobile Virtual Network Operator) market is also the most limited among the three companies, as LG Uplus accounts for 42% of the MVNO network share, ranking first."

Kim also stated, "An annual profit turnaround is expected, leading to an increase in the foreign ownership ratio. Considering the scale of profit improvement, the DPS (dividend per share) is expected to expand to 700 won (with a payout ratio of 47%). In addition, the company is expected to cancel 6.78 million treasury shares (1.6% of total shares) it already holds and proceed with an additional treasury share buyback in the second half of the year, estimated at 50 billion won."