[Click eStock] "KT, Continued Balanced Growth Across All Wireless-Centered Divisions Expected"

Daishin Securities Report

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] Daishin Securities maintained its buy rating and target price of 40,000 KRW for KT on the 10th, based on the expectation of steady growth across all sectors, centered on wireless services.

In the third quarter, sales reached 6.2 trillion KRW, a 4% increase compared to the same period last year, and operating profit was 380 billion KRW, up 31% year-on-year. Separate sales were 4.7 trillion KRW, and operating profit was 260 billion KRW, increasing by 3% and 24% respectively compared to the previous year. Although profits decreased compared to the second quarter due to retroactive wage increases for the first to third quarters this year, the profit improvement trend compared to the previous year was maintained. Kim Hoe-jae, a researcher at Daishin Securities, said, “Growth was seen in all areas including wireless, IPTV, internet, and B2B, and the profit contribution from subsidiaries was 120 billion KRW, exceeding pre-COVID-19 levels.”

Wireless service sales increased by 4% year-on-year, while internet and IPTV grew by 2% and 3% respectively, showing strong performance in the B2C sector. The B2B sector grew by 6%, with AI/DX and corporate line segments increasing by 30% and 3% respectively due to increased IDC demand as cloud work and living environments expanded. Wireless ARPU recorded 32,500 KRW, maintaining the highest ARPU among the three companies since the first quarter of 2019. The 5G penetration rate was 39.2%, marking the first place in penetration rate for 15 consecutive months since July last year.

Subsidiary sales grew by about 3% year-on-year for BC Card, and content subsidiaries (25%) and Estate increased by 46% including one-time sales. Combined profits were 120 billion KRW, exceeding the quarterly average of 100 billion KRW before 2019. Researcher Kim Hoe-jae said, “K Bank is showing faster-than-expected profit improvement, achieving an annual surplus on a cumulative basis in the third quarter, and the initial public offering (IPO) is expected to proceed smoothly after 2023.”

The content sector is expected to show full-fledged growth after the fourth quarter. With a paid-in capital increase of 180 billion KRW for KT Studio Genie, content production is expected to accelerate. The first original drama, ‘Crime Puzzle,’ will be produced in October this year and broadcast through KT’s channels such as Season, IPTV, and SKY TV, with plans to release ‘Midnight Thriller’ within the year.

With the start of the partnership with Disney+, not only content sales but also ARPU growth due to increased 5G usage is expected to accelerate, maintaining 5G leadership. Fourth-quarter ARPU is expected to grow 2% year-on-year to 32,600 KRW, with growth rates of 4% and 6% expected in 2023 and 2024 respectively.

Researcher Kim Hoe-jae said, “The separate operating profit target of 1 trillion KRW for 2022, presented last May, is expected to be achieved ahead of schedule,” adding, “This year’s dividend per share (DPS) is 1,700 KRW with a dividend yield of 5.5%, and next year’s DPS is expected to be 2,000 KRW with a dividend yield of 6.5%.”

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