[Click eStock] KT, Dividend and Subsidiary Value Rise After AGM... Active Buying Opportunity

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment stated on the 23rd that it maintains a buy rating on KT with a 12-month target price of 35,000 KRW, indicating that it is an active buying opportunity. The reasons for the recommendation include ▲ expected operating profit growth along with high mobile ARPU starting from Q1 ▲ despite the emergence of profit momentum, the current price offers a high expected dividend yield ▲ the possibility of pursuing IPOs not only for K-Bank but also for the anticipated future establishment of a media control tower ▲ management’s continued focus on profitability policies such as controlling labor costs and restructuring non-performing subsidiaries.

KT is scheduled to hold its general shareholders' meeting on the 29th. At this meeting, issues such as future dividend outlook, establishment of the media control tower, and the push for K-Bank’s listing are likely to be highlighted. Given this, the outlook for KT’s stock price after the shareholders' meeting is positive. Ultimately, since the merger between Skylife and Hyundai HCN has not been approved, KT plans to consolidate its headquarters’ media organizations, and if an IPO is considered in the long term, this is expected to significantly aid in re-evaluating the company’s value. Additionally, if KakaoBank is recognized by the market as having a high corporate value, K-Bank is also expected to positively impact KT’s stock price. For example, if K-Bank’s corporate value reaches 4 trillion KRW, KT’s corporate value could increase by 1 trillion KRW. Notably, recent deregulation of internet banks is also likely to have a positive effect on KT’s stock price.

Kim Hong-sik, a researcher at Hana Financial Investment, said, "KT is expected to see strong stock price gains this year as it is recognized as a representative earnings improvement stock and an absolutely undervalued stock." He added, "During periods of earnings improvement, telecom companies rarely recorded high expected dividend yields, but recently, a high expected dividend yield of around 6% is anticipated." He continued, "In the past, periods when KT’s expected dividend yield was high mostly coincided with poor earnings, but this time is different," adding, "High operating profit growth in the telecommunications division, the source of dividends, is highly likely, so as earnings are confirmed, KT’s stock price is expected to rise."

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