[Click eStock] Telecom Stocks to Rise Stepwise Next Year... Increase Weighting

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment forecasted a rise in telecommunications stocks on the 18th and recommended increasing their weighting.

Hong-sik Kim, a researcher at Hana Financial Investment, stated, "In 2022, the domestic telecommunications industry is expected to record high profit growth, suggesting the possibility of a long-term big cycle. We should keep this in mind," adding, "A corresponding stock price reaction is anticipated."

Hana Financial Investment projected that the combined operating profit of the three major telecom companies in 2022 will grow by 12%, with the headquarters' operating profit increasing by 14%. As the contribution of subsidiaries' operating profits bottoms out and rises, a sharp recovery in the telecommunications sector's performance is expected to drive profit growth for telecom companies.

The favorable government regulatory environment also brightens the investment outlook for domestic telecommunications stocks. Although the presidential election is scheduled for March 2022, the issue of telecom fee reductions is unlikely to be highlighted due to 5G promotion policies. As seen in the Netflix regulation situation, the trend of strengthening telecom network dominance is clearly emerging, which is positive. The much-anticipated entry into the true 5G era is also expected to materialize in 2022 with the launch of 28GHz equipment. Researcher Kim emphasized, "In the past, the introduction of new networks and deregulation have coincided with improvements in telecom stock performance and expansions in telecom stock multiples," adding, "The outlook for domestic telecom stocks in 2022 is optimistic, with a stepwise rise expected."

The investment attractiveness by stock within the telecommunications service sector is presented in the order of KT = LG Uplus > SK Telecom. This is based on a comprehensive consideration of profit trends, valuation attractiveness, expected dividend yield, subsidiary value, and supply-demand conditions. KT is expected to lead stock price increases due to total dividend value, expected dividend yield, and the planned listings of K Bank and Studio Genie. For LG Uplus, the split listing of SK Telecom's MNO (mobile network operator) is expected to spread recognition of absolute undervaluation relative to profits. SK Telecom recommended increasing weighting at around 13 trillion KRW post-split listing and reducing weighting at around 18 trillion KRW.

Researcher Kim stated, "Considering the dividend increase trends of KT and LG Uplus this year, their stock prices have relatively not risen enough yet," and added, "It is judged necessary to respond with strong buying at the end of the year in preparation for 2022."

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