[Click eStock] "SK Telecom, Positive Change in Dividend Policy... Target Price Up 16%"

KB Securities Report

[Asia Economy Reporter Minji Lee] KB Securities maintained a buy rating on SK Telecom on the 19th and raised the target price by 16.7% from the previous level to 350,000 KRW. This is based on the expectation of increased shareholder returns due to changes in the mid-term dividend policy.

The investment appeal of SK Telecom lies in the dividend policy change, excessive concerns over the reduction in MSCI index inclusion weight, and anticipation of a spin-off listing. SK Telecom revised its mid-term dividend policy during the Q2 earnings announcement. Until 2023, the total dividend amount will be determined within 30-40% of the remaining resources after deducting production costs (CAPEX) from the EBITDA of the surviving company post-spin-off. Starting from Q2, the company plans to implement quarterly dividends and pay at least 10,000 KRW annually on a cumulative basis. Since 2015, the company has maintained a fixed annual dividend policy of 10,000 KRW (approximately 715 billion KRW annually). The 2023 dividend resources target an increase of 20-30% compared to the current level, expected to be around 850 billion KRW.

Utilizing concerns over the reduction in MSCI index inclusion weight as a buying opportunity is also positive. In the August MSCI index regular inclusion weight announcement, SK Telecom’s weight was reportedly reduced by 0.11 percentage points due to decreased foreign investor buying capacity. KB Securities analyst Junseop Kim stated, “It causes mechanical buy-sell events by foreigners, increasing uncertainty. Short-term adjustments due to supply-demand factors can be investment opportunities, and the MSCI index weight change is scheduled for August 31.”

Expectations for the spin-off listing are also high. SK Telecom is concretizing strategies for the surviving company (SK Telecom) and the spin-off company (SK Square) ahead of the spin-off. Analyst Kim said, “The surviving company is utilizing not only wireless communication MNO but also a marketing platform for subscription products as new growth engines. The newly established company is enhancing the growth potential of subsidiaries such as 11st (collaborating with Amazon) and WAVVE (expanding investment in original content), so expectations for corporate value appreciation should also be considered.”

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