[Click eStock] "SKT, High Possibility of Treasury Stock Acquisition This Year"

Hana Financial Investment Issues 'Buy' Rating and Sets Target Price at 330,000 Won... Closing Price on 18th at 205,500 Won

Seoul Euljiro SK Telecom T Tower (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Boryeong] SK Telecom is highly likely to repurchase its own shares this year, according to an analysis.

On the 19th, Hana Financial Investment reported that SKT is highly likely to buy back its shares this year, and with SKT deciding on an interim dividend in July, it is expected to comment on its future dividend policy. During the Q1 conference call, the management mentioned that the total shareholder return combining share repurchases and dividends would be maintained at last year's level, and if the scale of share repurchases is not large, dividends would be kept at the previous year's level, potentially increasing the total shareholder return compared to last year.

There are three main purposes for share repurchases: stabilizing the stock price, utilization during corporate governance restructuring, and use in mergers and acquisitions (M&A) and strategic alliances. Kim Hongsik, a researcher at Hana Financial Investment, stated, "Considering the possibility of corporate governance restructuring next year, share repurchases are likely to be implemented before September, and based on past cases, the scale is expected to be between 160 billion and 490 billion KRW. If the share repurchase amount approaches 500 billion KRW, the payout ratio could exceed 100%, which might temporarily reduce dividends this year. However, in that case, the total shareholder return would reach 1.1 trillion KRW, and since the share repurchase would account for 3% of the total shares, a stock price increase due to supply and demand is inevitable. If the share repurchase amount is only 160 billion KRW, the dividend of 10,000 KRW per share (totaling 730 billion KRW) paid last year is expected to be paid again this year, so a total shareholder return close to 900 billion KRW is anticipated. Either way, it is clear that this is very positive news for SKT shareholders going forward," he analyzed.

Hana Financial Investment gave SKT a 'Buy' rating with a target price of 330,000 KRW. The closing price on the 18th was 205,500 KRW.

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