[Click eStock] "SKT's Strong 1Q Performance, Clear Improvement This Year... Target Price Up"

On the 26th, an employee working at SK Telecom T Tower in Euljiro, Seoul tested positive in the first COVID-19 screening. SK Telecom plans to restrict access to the building and carry out disinfection measures until the 28th. The photo shows T Tower on that day. Photo by Moon Honam munonam@

[Asia Economy Reporter Myung-Hwan Lee] DB Financial Investment announced on the 11th that it maintains a buy rating on SK Telecom and raises the target price from the previous 78,000 KRW to 80,000 KRW. This is due to expectations of improved performance this year.

SK Telecom's sales in the first quarter of this year were 4.2772 trillion KRW, and operating profit was 432.4 billion KRW. These figures represent increases of 4% and 15.6% respectively compared to the same period last year, with operating profit exceeding market expectations. Excluding approximately 75 billion KRW of non-recurring labor costs due to stock grants to employees, it is evaluated that the company achieved a solid profit of about 507 billion KRW. The reduction in expenses such as depreciation and marketing costs was greater than market expectations. In particular, marketing expenses began to decrease significantly, dropping 4.7% compared to the previous year and 8.4% compared to the previous quarter, which was analyzed as the main factor for the favorable performance.

DB Financial Investment's analysis suggests that the profit improvement will be even greater in the second quarter of this year. The company forecasts SK Telecom's consolidated sales for the second quarter of this year to increase by 6.4% year-on-year to 4.389 trillion KRW, and operating profit to rise by 22.2% to 483.3 billion KRW. Stable mobile phone revenue and reductions in marketing costs and depreciation expenses were cited as reasons. The company's metaverse platform 'Ifland' and T Universe subscription service were also presented as new businesses to watch. It is advised to pay attention to the diversification of B2B revenues such as the rapidly growing demand for Internet Data Centers (IDC) and Artificial Intelligence (AI) services.

Shin Eun-jung, a researcher at DB Financial Investment, analyzed, "Although profit growth had been relatively sluggish until now, it is judged that a clear improvement in performance has begun through the end of marketing cost amortization as shown in this recent performance."

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