[Click eStock] Telecom Stocks as Attractive Investments... February Dividend Announcements in Focus for 'Increased Weight'

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment announced on the 5th that it maintains the investment attractiveness of the telecommunications services sector in January as 'very high.'

Researcher Kim Hong-sik emphasized, "The announcement of year-end dividends in early February is highly likely to be a trigger for stock price increases, so a preemptive buying strategy is required," adding, "We recommend repurchasing and maintaining a strategy to increase weighting."

The reason for judging the investment attractiveness as high is primarily because the Q4 2021 earnings are expected to be announced favorably, and at the February board meeting, the increase in last year's dividends is expected to be significant, intensifying undervaluation debates. Additionally, the consolidated and headquarters operating profits of the three major telecom companies are expected to show double-digit growth in 2022, and the full-scale entry of telecom companies into new businesses such as the metaverse and AI is anticipated, which is expected to lead to multiple premiums and a decline in expected dividend yields. Lastly, regulatory conditions are better than ever, and despite the election season, expectations for an improved investment environment are rising.

Key telecommunications industry issues highlighted in January include the 2022 telecommunications industry outlook, telecom fee reduction pledges before and after the 20th presidential election, the announcement of confirmed dividends for 2021, discussions on 5G+ commercialization, the push for mandatory network usage fees legislation, and the impact of the Korea Communications Commission raising additional subsidies for agencies to 30%.

Researcher Kim said, "In the first half of this year, the issue of increased 5G CAPEX may resurface, and amid growing concerns about fee reduction recommendations before the March 20th presidential election, the issue of increased marketing expenses may be highlighted, so there are some burdens. However, realistically, the likelihood of telecom fees and marketing expenses becoming major market issues is low, so investors seem more likely to turn vague concerns into opportunities and enter buying positions," explaining, "When you look closely, the 5G CAPEX increase issue is a neutral one, as it involves both the burden of increased costs and the expectation of increased sales."

Following December, KT was suggested as the monthly top pick for January as well. After the confirmed dividend announcement in February 2021, the 2022 DPS consensus is expected to rise to around 2,000 KRW, and stock price formation matching this is expected to gradually take place. LG Uplus was also evaluated as having high investment attractiveness at the beginning of the year, as undervaluation debates are expected to continue around the Q4 earnings announcement and annual dividend announcement in February. On the other hand, SK Telecom is seen as having a stock price at bottom level based on expected dividend yield but is unlikely to lead the market early in the year. Its price-earnings ratio (PER) is the highest among the three companies, and it is the only one among them for which dividend increases are difficult to expect.

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