[Click eStock] KT, Beyond Cryptocurrency: Spotlight on K-Bank's Value

[Asia Economy Reporter Lee Seon-ae] Yuanta Securities announced on the 26th that it maintains a buy rating and a target price of 42,000 KRW for KT.

The reasons cited include the value of its subsidiaries, dividends per share, and undervaluation.

First, the core among its subsidiaries is K-Bank. The ownership structure of KT → BC Card → K-Bank was established because the amendment to the Internet Banking Special Act, which was submitted to the National Assembly plenary session in March 2020, was rejected. As a result, instead of KT, which was disqualified as the largest shareholder of K-Bank, BC Card took over the shares of K-Bank and became the largest shareholder holding 34% of the shares. K-Bank's business performance has exceeded expectations. This is due to the unprecedented boom in the cryptocurrency and credit loan markets. The scale of K-Bank's loans and deposits increased from 3.8 trillion KRW (Dec 2020) to 12.31 trillion KRW (Sep 2021), and from 2.99 trillion KRW (Dec 2020) to 6.18 trillion KRW (Sep 2021), respectively. Based on this, it achieved a cumulative net profit of 8.4 billion KRW through the third quarter, making annual profitability highly likely. K-Bank conducted its last capital increase in May, at which time it was valued at 2.2 trillion KRW. If the stock price rises to the level of Kakao Bank's valuation (PBR 5.5 times), the value held by KT would reach 2.2 trillion KRW.

Additionally, the benefits of SK Telecom's spin-off are likely to return to KT. Namgon Choi, a researcher at Yuanta Securities, explained, "Comparisons between SK Telecom (remaining company) and KT will become clearer after the spin-off," adding, "KT's undervaluation relative to earnings, expected dividends, and subsidiary potential cannot be ignored." He further stated, "The systematic separation of politics and KT, and efforts to strengthen representative leadership to enhance shareholder value, are expected to accelerate."

Meanwhile, as separate profit improvements continue, expectations for this year's dividends per share (DPS) are turning into confidence. It is forecasted to be over 1,700 KRW per share, with an expected dividend yield of over 5.5%. Next year's dividend is expected to approach 1,900 KRW.

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