[Click eStock] "LG Uplus Also a High Dividend Stock... Expected DPS 700 Won This Year"

Dividend Yield of the Three Major Telecom Companies

[Asia Economy Reporter Lee Jung-yoon] Daishin Securities maintained a buy rating and a target price of 22,000 KRW for LG Uplus on the 3rd, expecting high dividends again this year.

LG Uplus's sales in the fourth quarter of last year decreased by 3% year-on-year to 3.6 trillion KRW, and operating profit fell by 10% to 160 billion KRW. Last year's operating profit was 979 billion KRW, and excluding non-recurring labor costs of 65 billion KRW, the fourth quarter operating profit was in the 220 billion KRW range, indicating that the annual operating profit reached 1 trillion KRW.

In particular, wireless service revenue increased by 1% to 1.43 trillion KRW, achieving the highest quarterly sales record for 12 consecutive quarters since the turnaround in the first quarter of 2019. Operating revenue including wireless services reached 10.2 trillion KRW, meeting the target of 10 trillion KRW set earlier this year. The average revenue per user (ARPU) for wireless subscribers was 30,300 KRW, down 2.4%. Although an increase was expected after the turnaround in the fourth quarter of 2020, the 5G net increase market share in November last year fell to 21.3% from the initial 25%, resulting in negative growth. However, with the start of partnerships with Disney+ for IPTV and mobile services in November last year, it is expected that ARPU growth will accelerate due to increased use of additional services.

Additionally, marketing expenses were 610 billion KRW, accounting for 23% of operating revenue, maintaining the average level since the enforcement of the "Act on the Improvement of Distribution Structure of Mobile Communication Terminals" (commonly known as the 단통법) in the fourth quarter of 2014.

LG Uplus's capital expenditure (CAPEX) last year closed at 2.35 trillion KRW. Daishin Securities forecasts a downward trend in CAPEX as most of the outdoor coverage construction in the 3.5GHz band has been completed, and joint construction by the three companies is underway in rural areas.

If LG Uplus secures the adjacent 20MHz band at the lowest competitive price, there will be no burden of frequency costs. However, if the auction overheats, it may have to acquire the band, increasing frequency cost burdens. Nonetheless, since it is an expansion of an adjacent band, investment cost burdens are expected to be minimal.

Daishin Securities predicts that LG Uplus will grow larger this year. Last year's separate operating profit increased by 12% year-on-year, and consolidated operating profit rose by 11% year-on-year to 979 billion KRW. Researchers Kim Hoe-jae and Lee Ji-eun of Daishin Securities explained, "With profit improvement, the dividend payout ratio has been formalized at over 40% starting this year," adding, "LG Uplus is now a high-dividend stock."

LG Uplus's dividend per share (DPS) last year was 550 KRW, and this year's DPS is expected to be 700 KRW, yielding a return of 5.4%.

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