LG Uplus Rises Alone, Surging 42% to Become the 'Top Preferred Stock'

[Asia Economy Reporter Oh Ju-yeon] Among the telecommunications stocks that have gained attention as beneficiaries of the non-face-to-face (untact) trend following the spread of the novel coronavirus infection (COVID-19), LG Uplus's strong performance stands out. Following an earnings surprise in the first quarter, expectations for an increase in 5G subscribers have combined to make it the top preferred stock in the sector.

According to the Korea Exchange on the 12th, among the three major telecom companies, LG Uplus had the highest stock price increase from March 23 to the 11th of this month. During this period, LG Uplus's stock price rose from 9,470 won to 13,450 won as of the closing price on the 11th, marking a 42.03% increase in just a month and a half. Compared to SK Telecom's rise from 165,500 won to 205,000 won (23.87%) and KT's increase from 17,650 won to 23,450 won (32.86%), LG Uplus showed stronger upward momentum.

Even as the stock price gains of telecom stocks slowed down this month, LG Uplus continued its solo march. Because its stock price had been hovering between 10,000 won and the 13,000 won range throughout the second half of last year, some speculated that LG Uplus's stock price momentum might not be strong this year either.

However, the stock price, which was 12,750 won on the 4th, rose to 13,800 won as of 10 a.m. on the same day, recording an 8.24% return this month alone, contrasting with SK Telecom (-0.48%) and KT (-0.63%) which showed negative returns.

The market capitalization proportion also expanded noticeably. As of March 23, LG Uplus's market capitalization was 4.1347 trillion won, accounting for 18.55% of the sector's market cap, trailing KT by 500 billion won (2.13 percentage points). However, this month, its market cap grew to 5.8724 trillion won, increasing its market cap proportion to 20.37%. The gap with KT narrowed significantly to 250 billion won (0.9 percentage points).

In the securities industry, target prices have been raised one after another. KB Securities raised LG Uplus's target price by 6.3 percentage points from 16,000 won to 17,000 won. KB Securities analyst Kim Jun-seop explained, "The investment point for LG Uplus is the continuous improvement in the wireless business's performance," adding, "The proportion of LTE and 5G subscribers among wireless subscribers increased by 0.5 percentage points from the previous quarter to 96.7%, showing a steady upward trend."

NH Investment & Securities also raised its target price from 14,500 won to 18,000 won. NH Investment & Securities analyst Ahn Jae-man said, "Unlike its competitors, LG Uplus is showing solid performance even though its average revenue per user (ARPU) has not yet turned upward," and expressed expectations that "if ARPU turns around in the second half of the year, sales will rise even more sharply."

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