Declining LGU+, Foreign Investors Increasingly Buying In

Foreign Investors Buy for 21 Consecutive Trading Days...Telecom Sector Operating Profit Decline Unlikely

[Asia Economy Reporter Kum Boryeong] Although LG Uplus's stock price is on a downward trend, it has attracted attention as foreigners have been buying it for 21 consecutive trading days.

According to the Korea Exchange on the 2nd, LG Uplus's stock price fell from 14,500 won to 13,200 won without a single increase from the 17th to the 28th of last month. During the same period, foreign buying continued. Foreigners have been net buyers of LG Uplus for 21 trading days from January 31 to the 28th of last month.

One reason foreigners are buying LG Uplus is that among the three major telecom companies, it is the only one unlikely to see a decrease in operating profit in the telecommunications sector. Kim Hongsik, a researcher at Hana Financial Investment, explained, "At the current stage where both costs and sales are increasing, the future growth rate of service sales is important, and among the three telecom companies, LG Uplus is expected to show the largest increase in sales, which is positive."

LG Uplus is closely chasing second place in wireless market share. Especially with the transition to 5th generation (5G) mobile communication services, it has maintained 24-25%. During the 3G era, it was around 18%, but it surged to 22% in 4G LTE, and now it is striving to break out of its perennial third place. Recent quarterly net subscriber growth trends also show second place. Wireless service operating profit was only about 30% of SK Telecom, which was number one in the early LTE adoption phase, but now it has increased to 55%.

Synergy effects are also expected from the acquisition of LG HelloVision. By becoming a business operator selling both high-end and mid-to-low-end products in areas such as wireless services, paid broadcasting, and high-speed internet, LG Uplus has strengthened its competitive advantage in both wired and wireless sectors. The structure is such that LG Uplus mainly handles high-end products, while LG HelloVision is responsible for mid-to-low-end products.

In the wired sector, double-digit growth was seen through IPTV. Kim Hyunyong, a researcher at eBest Investment & Securities, analyzed, "Profit contribution from the wired business has significantly increased centered on IPTV," adding, "In the case of last year, when the annual sales growth rate slowed to single digits, LG Uplus alone recorded double-digit growth of 13.4% in IPTV sales growth rate in the fourth quarter." eBest Investment & Securities raised LG Uplus's target stock price from the previous 17,000 won to 19,000 won.

This content was produced with the assistance of AI translation services.