[Click e Stocks] "LG Uplus, Short-term Momentum Lacking... Target Price Down"

On the 8th, SK Securities downgraded the target price of LG Uplus from 14,500 KRW to 13,000 KRW, reflecting this year's sluggish performance and lack of short-term momentum. The investment rating was maintained at 'Buy.'

Choi Gwan-soon, a researcher at SK Securities, explained, "We maintain the 'Buy' rating due to expected performance improvement starting next year and an increase in year-end dividends following this year's rise in separate net profit. However, the target price was lowered to reflect this year's somewhat weak performance and lack of short-term momentum."

LG Uplus's third-quarter performance this year fell short of market expectations (consensus). LG Uplus's third-quarter operating revenue was 3.5811 trillion KRW, up 2.3% year-on-year, but operating profit was 254.3 billion KRW, down 10.8%. Researcher Choi said, "Operating revenue largely met expectations, but operating profit fell short of the consensus (271.3 billion KRW). The increase in costs such as electricity charges and amortization of intangible assets due to additional frequency allocation caused the third-quarter operating profit to decline, and as a result, the annual operating profit is expected to slightly decrease compared to the previous year."

However, the dividend appeal is high due to the stable growth of the telecommunications industry. Researcher Choi said, "Due to the stable growth of the telecommunications industry, separate net profit is expected to increase by 4.8% year-on-year. Year-end dividends per share are expected to rise to 450 KRW, up from the previous year, making the dividend appeal high."

Performance improvement is expected to accelerate from next year. Researcher Choi forecasted, "The ultra-personalized rate plan 'Nugget,' launched last October, is expected to secure leadership in 5G rate plans by expanding customer choice and convenience. Additionally, with the completion of the Pyeongchon 2nd IDC center last October, as well as long-term growth potential in electric vehicle charging services and logistics platforms, significant performance improvement is expected to begin next year." He added, "Considering stable dividends and the possibility of performance improvement next year despite the lack of short-term momentum, a strategy of approaching from a buying perspective when the stock price falls is valid."

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