[Click e-Stock] "KT Expected to Decline on Negative Factors... Bottom-Fishing Recommended"

On October 28, Hana Securities maintained its "Buy" investment rating and a target price of 65,000 won for KT, stating, "While a decline in share price is expected due to negative factors, KT remains promising for long-term investment."

On this day, Kim Hongsik, a researcher at Hana Securities, commented, "With a majority of negative factors likely to emerge, it is important to carefully identify the stock's bottom. A sharp rebound in share price is also anticipated after December."

KT has recently faced ongoing management issues, including a large-scale hacking incident. In particular, during this month's National Assembly audit, there were calls for sanctions related to the hacking and demands for changes in management.

Kim noted, "There is a high possibility that specific customer compensation plans and the level of regulatory sanctions will be revealed next month. While third-quarter results are already a concern, there are also demands for company-wide USIM chip replacements and an expansion of penalty exemption coverage for all customers. In the fourth quarter, the possibility of a performance shock due to large-scale one-off costs should also be considered."

However, Kim recommended a bottom-fishing strategy next month. He predicted that the worst phase will likely pass in early to mid-November, and that a sharp recovery in investor sentiment and share price could occur after December. He added, "Although there is a possibility of incurring large-scale hacking-related costs, the likelihood of a reduction in total shareholder returns is low. Next year, the company is expected to see continued growth in headquarters profits as well as an upward trend in dividends per share (DPS)."

He also stated, "Given the issue of foreign ownership limits being reached, shareholder returns are expected to be delivered entirely through dividends rather than share buybacks. The expected dividend yield for next year is close to 8%, making KT likely to be classified as a beneficiary of separate dividend taxation. In the long term, a significant increase in share price is anticipated," he emphasized.

Additionally, Kim commented, "It would be advisable to gradually accumulate shares starting at the end of November. Although there remains the risk of weak fourth-quarter results due to hacking-related costs and concerns over corporate governance, unlike SKT, even in the worst-case scenario, the likelihood of a dividend cut is very low."