[Click eStock] "KT, a Reliable Alternative in a Highly Volatile Market... Target Price Up"

Target Price Raised from 44,000 Won to 48,000 Won

On the 29th, SK Securities raised the target price for KT from 48,000 KRW to 48,000 KRW, considering the possibility of earnings improvement and expanded shareholder returns, viewing it as a reliable alternative in a highly volatile market. The investment rating was maintained at 'Buy.'

Choi Gwan-soon, a researcher at SK Securities, explained, "We expect a profit leverage effect due to improved profitability in the second half of the year, so we maintain the investment rating and raise the target price to 48,000 KRW by applying a price-to-earnings ratio (PER) of 10 times to the expected earnings per share (EPS) for 2024. Given the high visibility of earnings improvement in the second half and the high possibility of expanded shareholder returns in the mid to long term, we believe KT can be a reliable alternative in a highly volatile market."

The pace of profitability improvement is expected to accelerate in the second half. Researcher Choi said, "KT's operating revenue in the second half of this year is expected to increase by 1.2% year-on-year to 13.6 trillion KRW, and operating profit is expected to rise by 26.9% to 745.4 billion KRW. Stable top-line growth and cost efficiency effects are expected to take full effect, and with quality subscriber growth in both wired and wireless services, sales growth is expected to remain valid in the second half. Additionally, IPTV subscribers have increased for two consecutive months, raising expectations for a sales rebound in the media sector in the second half." He added, "Among group companies, BC Card and KT Cloud are expected to drive growth, and since the appointment of a new CEO last year, the effects of cost efficiency and profitability-focused business restructuring have appeared, gradually expanding profit leverage."

The possibility of expanded shareholder returns in the mid to long term is also high. KT announced during the Q2 conference call this year that it is pursuing structural improvements to rationalize low-profit businesses, mainly in B2B (business-to-business). Researcher Choi said, "This is expected to reduce capital expenditures (CAPEX) and improve profitability in the mid to long term, thereby expanding resources for shareholder returns. KT is actively and positively reviewing the value-up program, and since the core of the value-up incentive is expanded shareholder returns, we believe the possibility of expanded shareholder returns by KT after 2024 is also high."

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