KT with Growth Wings Aims to Surpass Telecom Leader... Surges Past 40,000 Won

[Asia Economy Reporter Lee Seon-ae] KT's stock price growth this year is remarkable. Drawing attention with a higher growth rate than competitors SK Telecom and LG Uplus, the dominant view is that the stock price growth will be even more robust in the second half of the year. This is based on the judgment that KT is overwhelming in all aspects, including earnings trends, profit levels, and dividend outlook.

According to the Korea Exchange on the 9th, KT's closing price reached a high point of 33,950 KRW on August 2. Based on this, the stock price growth rate for this year was calculated at 42.6%. Compared to the KOSPI's 9.5%, SK Telecom's 27.4%, and LG Uplus's 23.2% growth rates during the same period, KT achieved significantly higher growth. The securities industry cited three major changes as the driving forces behind this high growth.

First, KT is pursuing a transformation into a digital platform company (Digico, hereafter Digico). While KT has traditionally been characterized as a stable value stock, this year is different. KT is emphasizing growth by focusing on digital platform business based on its accumulated telecommunications capabilities and ABC (AI, Big Data, Cloud) competencies. Growth in the B2B (business-to-business) market is particularly notable. As digital transformation (DX) across all industries accelerated due to COVID-19, KT has proactively discovered and applied its own DX models in areas such as transportation, messaging, finance, communication, and logistics. KT plans to lead innovation in other industries and changes in citizens' lives by launching various DX products and services not only for public institutions and large corporations but also for small business owners, aiming to grow the sales proportion of the digital platform sector to around 50% by 2025.

Strengthening communication with the market is also a driving force behind the stock price growth. Since CEO Koo Hyun-mo took office in March 2020, he has focused on raising KT's undervalued corporate value. CEO Koo and other key executives have actively engaged in share buybacks as part of responsible management and confidence in performance, and they are directly engaging with shareholders. In 2020 and 2021, CEO-led investor presentations were held twice to communicate with capital market stakeholders. KT also held three Investor Forums related to its finance, media, and commerce businesses, where group company CEOs and executives took the lead in explaining business details. Additionally, IR personnel regularly visit the private banking centers of major domestic securities firms to proactively conduct IR activities targeting individual shareholders.

Lastly, the strengthening of shareholder return policies is another noteworthy aspect. Through CEO-led investor presentations in 2020, KT announced it would maintain a policy of distributing 50% of adjusted net income on a separate basis as dividends until 2022. Accordingly, the dividend per share for the 2020 fiscal year was paid at 1,350 KRW, a 22.7% increase from the previous year (1,100 KRW → 1,350 KRW). Based on the first quarter results and the outlook for the second quarter, KT is expected to achieve better performance this year than last year through solid profit generation in its core businesses and revenue expansion in new growth businesses. Consequently, dividends are also expected to continue rising.

Due to these changes, market evaluations of KT are also shifting. Especially after KT's second-quarter earnings announcement (on the 10th), undervaluation debates are expected to resurface. Supply and demand are also favorable. Following a fourth-place ranking in institutional net purchases in the first half of this year, KT ranked sixth as of August 2 in the second half. Kim Hong-sik, a researcher at Hana Financial Investment, said, "When evaluating based on earnings trends, dividend outlook, subsidiary value, and valuation, KT's stock price growth rate is expected to be higher than SKT's." He added, "With KT's likely dividend per share (DPS) of 1,600 KRW this year and an expected dividend yield potentially dropping to 4%, there is a high possibility of surpassing 40,000 KRW within the year."

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