[Click eStock] SK Telecom, Emphasis on Maintaining Dividends

[Asia Economy Reporter Junho Hwang] Hana Financial Investment set the target price of SK Telecom at 80,000 won on the 2nd.

Hana Financial Investment set a buy rating for SK Telecom after the split, stating that ▲ next year, high profit growth is expected based on the growth of average revenue per user (ARPU) in mobile communications and the stagnation of depreciation expenses, ▲ it is considered undervalued as the total dividend before the split will be maintained until next year, and ▲ the recent evolution to 5G is expected to proceed in earnest.

The telecommunications sector is expected to continue high operating profit growth next year. The increase in mobile phone ARPU will expand from 1% this year to 5% next year, and depreciation expenses are also expected to stagnate due to a decrease in frequency-related costs despite increased 5G investment. LTE usage fees will decrease, and the 5G frequency auction is expected to be delayed until 2023.

Marketing expenses will also increase next year, but the increase is expected to be around 4%. It will be difficult for phone sales to surge, and there is expected to be little change in subscriber acquisition cost (SAC), so despite the increase in advertising expenses, the stable trend in marketing expenses is expected to continue next year as well.

Hongshik Kim, a researcher at Hana Financial Investment, analyzed, "After the split, SKT management seems to emphasize maintaining dividends. This is partly due to awareness of possible future corporate governance restructuring, and because stock prices have a significant impact on management evaluation," adding, "the total dividend is expected to be maintained at 720 billion won next year, following this year. It is necessary to be aware that upward pressure on the stock price may increase."

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