[Click eStock] "SK Telecom, Dividend Increase + Stock Price Rise Expected"

SKT Tower, Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@

Hana Securities evaluated on the 5th that expectations for SK Telecom (SKT) stock price increase have risen as the possibility of SK Group's restructuring of its governance emerged. Accordingly, they maintained a 'Buy' investment rating and a target price of 70,000 KRW.

Kim Hong-sik, a researcher at Hana Securities, stated, "As SKT's high dividends are maintained and the structure is such that it is advantageous for both SK and SKT stock prices to rise, expectations for SKT stock price increase are likely to grow."

Researcher Kim explained, "Ultimately, SKT, which has a high dividend payment capacity, is likely to seek a transition to a structure where increased dividends from excellent subsidiaries can be directly delivered to the group head. Optimistically, the shareholder return policy of SKT, which invested 1 trillion KRW annually last year, is expected to continue in the future."

While share buybacks are good, dividends are more effective in securing funds. Therefore, the possibility of dividend increases should be kept open.

Along with this, although short-term profit stagnation is expected, long-term profit growth will continue based on traffic increase, and considering the total shareholder return yield, the absolute undervaluation situation is also cited as a basis for stock price increase.

Meanwhile, Researcher Kim predicted that in the long term, SK and SK C&C will merge, and SKT will undergo a spin-off followed by a merger of SK and SK Square. In this process, the possibility of SK canceling treasury shares it holds was also suggested.

He also mentioned that if there are no tax issues, SK might contribute SKT shares in kind to SK Square as an option and expand SK Square's stake through a public tender offer. This is because SK Square cannot pay dividends, and the group head needs a way to receive dividends from Hynix.

Researcher Kim explained, "Even if SK Square pays dividends later, the burden of double taxation is significant, and SK's treasury share cancellation benefits both major and minority shareholders." Furthermore, the plan for SK to contribute SKT shares in kind and then conduct a public tender offer by SK Square could help minimize the decline in the group head's SK shareholding ratio.

The most important factor is the merger ratio between SK and SK Square. If the merger ratio is favorable, a structure can be established where the group head can receive Hynix dividends without a significant decrease in shareholding ratio.

Researcher Kim emphasized, "The restructuring of SK Group's governance is positive for SKT shareholders in both the short and long term," adding, "Even considering all possibilities, this issue is clearly a positive factor for SKT."

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