[Click eStock] "LG Uplus Expected to Deliver Earnings Surprise in Q2 Again"

by Keum Boryeong

Published 10 Jun.2020 07:39(KST)

Yuanta Securities Issues 'Buy' Investment Opinion and Sets Target Price at 20,000 Won... Closing Price on 9th at 13,100 Won

Photo by Asia Economy DB

[Asia Economy Reporter Kum Boryeong] LG Uplus is expected to show an earnings surprise again in the second quarter.

According to Yuanta Securities on the 10th, LG Uplus's operating profit for the second quarter is estimated to be 223.8 billion KRW, a 1.9% increase compared to the first quarter. The consensus for second-quarter operating profit is 202.3 billion KRW. Namgon Choi, a researcher at Yuanta Securities, explained, "The consensus is interpreted as a result of unresolved concerns about competition caused by the increase in announced subsidies on May 1 and the rise in number portability cases last month. However, the increase in announced subsidies on May 1 was led by manufacturers, not telecom operators, and it is understood that the burden on telecom operators did not increase significantly. Marketing costs have stabilized steadily in the second quarter, and I am confident this trend will continue into the second half of the year."

The stock price is also predicted to rise. Despite LG Uplus's solid earnings announcement, foreign selling pressure has continued, resulting in no reversal effect from a supply-demand perspective. Institutional investors also continued to sell LG Uplus shares regardless of the earnings, creating a vicious cycle. Researcher Choi said, "Once the market confirms the profitability in the second quarter, the stock price will not remain at the current level. There is no reason for earnings and stock price to move separately for so long. Following the first quarter, net subscriber additions are being properly made, and steady growth is expected in the corporate and IPTV sectors while minimizing the impact of COVID-19."