"KT Hits Short-Term Peak, Expected to Trade Sideways for Now" [Click e-Stock]

Short-term Earnings Peak in Q2
Shareholder Returns Expected to Increase Next Year

As KT's stock price has risen sharply over the past two years, analysts suggest that it has reached a short-term peak. Since the company’s performance has also hit a short-term high, it is expected to remain within a trading range for the time being.

On the 27th, Hana Securities raised its target price for KT by 16.7% to 70,000 won, but maintained this cautious outlook. The previous day's closing price was 55,100 won.

The brokerage expects KT to continue delivering stable profit growth both annually and on a quarterly basis compared to the same period last year. It also forecasts that the stock price will continue to rise next year, driven by increases in dividends per share (DPS) and total shareholder returns.

Nevertheless, Hana Securities judged that KT has reached a short-term peak. This is because, with apartment pre-sale profits recognized in the second quarter, consolidated operating profit is likely to have peaked in the short term, and quarterly DPS increases are not expected until 2026. Since the market consensus for consolidated operating profit has already risen significantly, it will be difficult for the stock price to climb further on the back of moderate earnings growth. In addition, the fact that KT’s stock price has nearly doubled over the past two years is seen as a burden. The brokerage believes that the increases in shareholder returns and earnings have already been fully reflected in the stock price.

In fact, after attempting a rebound last month, KT’s stock price has stagnated this month. This is attributed to investors already being fully aware of the possibility of a “surprise earnings” report, so it failed to serve as a positive catalyst. Additionally, as large-scale apartment pre-sale profits were recognized in the second quarter, consolidated operating profit is expected to decline in the third quarter, which has likely increased investors’ desire to realize gains.

Dividend-driven stock price increases are also expected to be difficult within this year. As in the second quarter, there is a high possibility that the DPS will remain at 600 won in the third quarter. It is projected that DPS will be raised in the fourth quarter of this year or the first quarter of next year. Either the DPS will be increased in January next year, or as next year’s full-year earnings forecasts are released, there may be momentum for a DPS increase around April next year.

Kim Hongsik, a researcher at Hana Securities, explained, “KT’s expected dividend yield will only change if market interest rates drop sharply or expectations for a 5G plan overhaul emerge, but it is still somewhat early for that. As investors begin to look beyond the end of this year toward 2026, there is a high likelihood that the stock price will rise.”