KT Target Price 45,000 Won... Top Pick in Telecommunications

[Asia Economy Reporter Park So-yeon] Hana Financial Investment maintained a target price of 45,000 KRW for KT and presented it as the 'Top Pick' within the telecommunications services sector.

According to FN Guide on the 20th, Hana Financial Investment stated in a recent report, "Despite the slowdown in GDP growth, ARPU is expected to increase due to traffic growth."

Researcher Kim Hong-sik of Hana Financial Investment explained, "Even considering further interest rate hikes, the dividend attractiveness remains high, and given recent cost trends, first-quarter earnings are expected to be favorable, raising expectations for improved performance and DPS increase this year."

He added, "There is a high possibility that the company will gradually begin corporate governance restructuring, which will bring expectations for organizational slimming, new business development, and regulatory easing."

Researcher Kim also mentioned, "Due to the trend of decreasing marketing expenses, first-quarter results are expected to be better than anticipated." Net subscriber additions in January and February were lower than expected.

While 5G subscribers are likely to increase again in March due to the Galaxy 22 launch effect, total device sales are expected to decline compared to the fourth quarter due to a shortage of inventory phones. Accordingly, the increase in mobile ARPU may slightly fall short of initial expectations, but marketing expenses are expected to decrease significantly compared to the previous quarter.

Researcher Kim Hong-sik estimated, "Considering the reduction in LTE frequency-related costs, depreciation expenses are also expected to turn down compared to the previous quarter," and "KT's consolidated operating profit for the first quarter is expected to reach 470 billion to 500 billion KRW, a double-digit increase compared to the same period last year."

Furthermore, he explained, "KT is ultimately expected to transform into a business holding company system through a physical division," adding, "The major difference from a typical physical division is regulatory easing due to the telecommunications sector becoming 100% unlisted, and slimming down of the vast organization."

Researcher Kim noted, "Of course, there is a possibility of intensified conflict with the labor union if this is pursued," but "with CEO Koo Hyun-mo's reappointment, the process is likely to accelerate rapidly and will present a significant opportunity for existing shareholders upon implementation."

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