Telecom Stocks: Earnings Improve but Stock Prices Lag Behind

[Asia Economy Reporter Oh Ju-yeon] The earnings of the three major telecom companies?SK Telecom, KT, and LG Uplus?in the third quarter of this year are expected to increase by up to double digits compared to the same period last year, but their stock prices have yet to recover from weakness.

According to FnGuide on the 22nd, the estimated operating profit for SK Telecom in the third quarter, based on forecasts from more than three securities firms, is 344.8 billion KRW, representing a 14.1% increase compared to the same period last year. KT is also expected to see its third-quarter operating profit rise by 6.7% to 333.4 billion KRW, up from 312.4 billion KRW in the third quarter of last year.

The company expected to show the largest improvement in earnings is LG Uplus. Its operating profit for the third quarter is projected to be 225.2 billion KRW, a 44.5% increase year-over-year.

These earnings estimates have slightly increased compared to a month ago. For SK Telecom and LG Uplus, the estimates were revised upward by 0.3% and 1.1%, respectively, compared to last month.

However, the anticipation of improved earnings has not translated into stock price gains. SK Telecom’s stock price was 248,500 KRW on August 26 but fell 4.02% to 238,500 KRW as of 10:20 AM on the day.

KT’s stock price dropped 9.80% from 25,500 KRW on August 13 to 23,000 KRW on the day, and LG Uplus fell 8.10% from 12,350 KRW on August 26 to 11,350 KRW, with all three telecom companies’ stock prices remaining weak. Even during the period from July to mid-August when the KOSPI showed strength, the stock prices of the three telecom companies did not keep pace with the index’s gains.

Starting in October, interest in dividends is expected to increase significantly, and the net buying by foreign investors is also worth noting.

Researcher Kim Hoe-jae of Daishin Securities analyzed, "Despite the launch of the Galaxy Note 20, the market remains calm. The number of 5G subscribers is steadily increasing, and marketing expenses are being managed at a controllable level relative to sales, so the trend of earnings improvement is expected to continue into the third quarter following the second quarter."

Researcher Kim added, "October marks the time to pay close attention to dividends. After SK Telecom mentioned plans to increase dividends in its early August earnings announcement, the net buying by foreign investors has expanded, which should be closely observed."

The year-end dividend per share (DPS) and yield are expected to be 1,100 KRW and 4.7% for KT, 9,000 KRW and 3.7% for SK Telecom, and 400 KRW and 3.4% for LG Uplus, respectively.

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