KT, Stock Price Still at Low Point... Rally Expected to Continue

[Asia Economy Reporter Oh Ju-yeon] Kiwoom Securities analyzed that KT's stock price is still at a low point and predicted that the rebound will continue.

According to Kiwoom Securities on the 15th, KT's first-quarter operating revenue is expected to be 5.962 trillion KRW, a 2% increase compared to the same period last year, and operating profit is expected to be 343 billion KRW, a 15% decrease, in line with consensus.

On a separate basis, wireless revenue is analyzed to be 1.719 trillion KRW, with the impact of the novel coronavirus disease (COVID-19) considered not significant. Additionally, the media business on a separate basis is 420 billion KRW, maintaining steady growth, and it is judged that VOD sales growth and subscriber base expansion continue in the IPTV business.

Researcher Jang Min-jun explained, "This year, operating revenue is expected to be 24.633 trillion KRW, and operating profit 1.185 trillion KRW."

Although the growth momentum of 5G due to the impact of COVID-19 in the first half is likely to weaken, subscriber recovery is expected as 5G device launches become full-scale in the second half, and a performance rebound is anticipated.

The wireless business is expected to grow compared to the previous year at 6.894 trillion KRW, as there is still an effect of average revenue per user (ARPU) increase due to the expansion of 5G subscribers.

Although the net increase of 5G subscribers in the first half may be less than in the second half of last year due to COVID-19, it is forecasted that subscriber inflow will grow significantly from the third quarter.

Researcher Jang said, "Based on the dominant position in the paid broadcasting market, VOD sales growth and other fee growth are also expected." He also positively evaluated that the real estate business's Gwangjin-gu project development results will be reflected. In terms of operating profit, a decrease in marketing expenses due to eased competition intensity and a reduction in labor costs due to an increase in natural retirements are expected.

Researcher Jang stated, "In terms of stock price, valuation indicators became attractive with a price-earnings ratio (PER) of 7.4 times, price-to-book ratio (PBR) of 0.39 times, and EV/EBITDA of 2.2 times based on 2020 estimates due to COVID-19, and considering that performance volatility is not large, the possibility of a rebound is high." He also maintained a 'Buy' investment opinion and a target stock price of 38,000 KRW, adding, "Expectations reflecting the new CEO's presentation of a new management strategy direction are also likely to be factored in."

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