[Click eStock] "KT, Despite Strong Performance and Stable Dividends... Undervalued Stock Price"

[Asia Economy Reporter Park Ji-hwan] Daishin Securities maintained a 'buy' rating and set a target price of 36,000 KRW for KT on the 1st, stating that improved earnings and stable dividends will lead to the normalization of the undervalued stock price.

Kim Hoe-jae, a researcher at Daishin Securities, said, "KT presented its mid-term dividend policy and management goals at a CEO-led corporate briefing on the 29th of last month," adding, "They decided to maintain a dividend policy of 50% of adjusted net income on a separate basis from 2020 to 2022 and at least last year's dividend per share (DPS) level of 1,100 KRW."

He explained, "The 50% EPS growth, which is higher than the 35% operating profit growth rate, is influenced by a greater reduction in non-operating burdens such as decreased borrowings, reduced losses related to subsidiaries, and decreased impairment of tangible and intangible assets," and predicted, "This will soon lead to improved dividend reliability." He added that the 50% dividend payout ratio means a return to the policy KT maintained for 10 years since its privatization in 2003, which was a dividend payout ratio of over 50% or a minimum DPS of 2,000 KRW, indicating normalization after the slump in LTE.

Researcher Kim analyzed, "The estimated DPS is 1,100 KRW this year, 1,200 KRW in 2021, and 1,400 KRW in 2022. Although dividend growth compared to last year will be difficult this year due to 5G investments, the current stock price-based yield is 4.5%, which is very attractive in the zero interest rate era."

KT's average revenue per user (ARPU) falls the least during downturns and rises the earliest during upturns, currently achieving the highest ARPU among the three companies, according to analysis. He emphasized, "KT is leading the market by showing a wireless market share exceeding its 5G competitiveness," and "the investment burden in 5G has also decreased due to various infrastructures."

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