Mobile Carriers 3 Companies, Stock Price Rebound Expected in Second Half of Year

[Asia Economy Reporter Minji Lee] As the three major telecommunications service providers are expected to report solid earnings in the second quarter and the number of 5G subscribers continues to rise, it is anticipated that mobile communication sales will show favorable performance.

Looking at the stock price trends of telecommunications stocks listed on the KOSPI market from last month to the 9th, they fell by about 1%. This contrasts with the KOSPI, which rose about 0.5% during the same period. In particular, over the past month alone, the three telecom companies (SK Telecom, LG Uplus, KT) dropped 3.1%. This is interpreted as due to the absence of short-term momentum following SK Telecom's split decision, LG Uplus's share buyback and quarterly dividend announcement, and KT's launch of KT Alpha.

Researcher Kwansoon Choi of SK Securities explained, "Supply and demand factors such as profit-taking from the stock price rise since the beginning of the year and the approach to the foreign ownership limit due to the expansion of foreign buying are also causes of the stock price weakness."

However, stock prices are expected to rebound from the second half of the year. This is because favorable earnings are expected in the second quarter along with company-specific positive factors. The number of 5G subscribers is expected to surpass 20 million by the end of the year, and IPTV subscribers are also expected to increase significantly, leading to a mix improvement effect.

Positive factors for individual companies are also anticipated. Researcher Choi analyzed, "There are many positives such as expectations for an increase in combined market capitalization after SK Telecom's split, LG Uplus's quarterly dividend, and confirmation of KT's commerce performance."

Due to the recent stock price adjustment, the multiple attractiveness has also increased. Looking at the 12-month forward price-to-earnings ratios (PER) of SK Telecom, KT, and LG Uplus, they are 9.7 times, 9.2 times, and 9.0 times respectively, down about 10% from this year's peak. Considering that the KOSPI is at 11.6 times, these levels are still low. Researcher Choi stated, "Since the annual earnings estimates of the three telecom companies are steadily rising, the decline in telecom stocks' multiples indicates valuation attractiveness."

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