[Click eStock] "KT, Strong 2Q Earnings and Shareholder Return Policy... Market Cap of 10 Trillion Won Is Still Low"

[Asia Economy Reporter Lee Myunghwan] Daishin Securities announced on the 11th that it maintains a buy rating and a target price of 52,000 KRW for KT. It pointed out that KT has sufficient potential for stock price growth, supported by strong second-quarter earnings and shareholder return policies.

KT's consolidated sales for the second quarter of this year increased by 5% year-on-year to 6.3 trillion KRW, while operating profit decreased by 4% to 460 billion KRW. Excluding one-time personnel expenses related to employee stock compensation, operating profit rose by 5.1% year-on-year to 500 billion KRW, according to Daishin Securities' analysis. KT supports employee stock ownership, providing an additional 15% free shares to employees who acquire company stock.

Daishin Securities noted that KT's continued strong performance is driven by growth in wireless and business-to-business (B2B) sectors and effective cost control. As of June, KT's 5G subscriber base reached 7.47 million, achieving a penetration rate of 53.5%, ranking first for 24 consecutive months. The average revenue per user (ARPU) for the second quarter was 32,400 KRW, a 3.2% increase compared to the same period last year. KT's ARPU has consistently ranked first since the first quarter of 2019, with a gap of 2,000 to 3,000 KRW compared to competitors, according to Daishin Securities.

By business segment, B2B sales grew by 15%, with growth in wired and wireless business (TELCO, 7%) and digital platform (DIGICO, 17%). Selling expenses amounted to 660 billion KRW, accounting for 16.7% of sales. This exceeds the average of 15.5% since the enforcement of the "Act on the Improvement of Distribution Structure of Mobile Communication Terminals" (the 단통법 law).

Daishin Securities attributes KT's stock price increase to profit improvement and strong shareholder return policies. KT's stock price rose 29% last year, achieving the highest growth rate in the sector and significantly outperforming the index increase of 4%. This year, it rose 25%, marking the highest sector growth rate for two consecutive years. Researcher Kim Hoejae of Daishin Securities analyzed, "Although KT recently reclaimed a market capitalization of 10 trillion KRW for the first time in 10 years, the current stock price is still positioned at the lower end of the price-to-earnings ratio (PER) band, indicating ample room for growth."

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