[Click eStock] KT at Historic Low: Stock Unlikely to Rebound for Years...

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment has maintained KT's target stock price at 35,000 KRW.

According to Hana Financial Investment on the 16th, KT increased its dividend per share (DPS) by 22% compared to the previous year. This was a surprising level that greatly exceeded market expectations. Accordingly, KT's stock price is likely to rebound sharply in a short period. The bottom of telecom stocks is determined not by the price-earnings ratio (PER) but by the expected dividend yield. Even if the dividend level from last year is maintained, KT's expected dividend yield reaches 5.5%. Except for special cases in the past, KT's expected dividend yield has never exceeded 5%. It is believed that this phenomenon stems from KT's management conservatively commenting on last year's dividends. Therefore, from now on, it is highly likely that the stock price will reflect the increase in KT's dividend per share to 1,350 KRW retrospectively. Considering the recent interest rate levels, a rapid influx of buying is naturally expected. If KT's stock price rebound occurs this time, it is judged that it will be difficult to see this price range again for several years to come.

In particular, the performance outlook for the telecommunications sector, which can be seen as the source of dividends, is brighter than ever. Following the turnaround in operating profit in the telecommunications sector last year, a full-fledged growth trend is expected from this year. This is because the increase in 5G subscribers is leading to a rise in mobile phone ARPU. Therefore, the dividend per share is naturally expected to increase: 1,100 KRW in 2019 → 1,350 KRW in 2020 → 1,600 KRW in 2021 (forecast). This year's expected dividend yield reaches as high as 6.5%. Considering the current expected dividend yield of telecom companies and the trend and outlook of dividends per share, KT's stock price is bound to rise.

Kim Hong-sik, a researcher at Hana Financial Investment, analyzed, "It is at a historical low level, and the gap with market interest rates has widened too much. The trend of telecom companies' dividends has served as a milestone to gauge the long-term performance outlook of telecom companies." He added, "Short-term stock price increases are expected due to improved investment sentiment and the influx of dividend-driven buying."

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