[Click e-Stock] "SK Telecom, Disappointing Dividend Reduction... Target Price Lowered"

Target Price Lowered from 65,000 Won to 61,000 Won

On October 31, NH Investment & Securities reported that the dividend appeal of SK Telecom has diminished and lowered its target price from 65,000 won to 61,000 won. The investment opinion was maintained as 'Buy'.

Ahn Jaemin, a researcher at NH Investment & Securities, stated, "Due to customer compensation following the recent cyber breach incident, SK Telecom saw a significant drop in operating profit and turned to a net loss in the third quarter of this year. As a result, the company decided not to pay a dividend per share at the end of September 2025." He added, "The key issue is that the fourth quarter dividend is also likely to be zero, so the annual dividend per share is expected to be 1,630 won. In this case, the dividend yield for 2025 would be only 3.1%, which is about half the level of competitors, reducing the dividend appeal."

In the third quarter, SK Telecom posted sales of 3.98 trillion won, down 12.2% year-on-year, and operating profit of 48.4 billion won, down 90.9%. Researcher Ahn explained, "Operating profit fell sharply due to a decline in sales resulting from customer appreciation package compensation." He also noted, "Non-operating expenses included a 134.7 billion won fine, resulting in a net loss of 158.2 billion won."

Fourth quarter results are also expected to be weak. Ahn predicted, "Due to one-off personnel expenses from the recently initiated voluntary retirement program (estimated at 100 billion won) and the possibility of a 'big bath' (recognition of large-scale losses) following the CEO change, operating profit in the fourth quarter will also be sluggish."

There is also uncertainty as to whether the dividend will recover to previous levels even if earnings rebound next year. Ahn commented, "Operating profit in 2026 is expected to recover to 1.81 trillion won, but it is questionable whether the dividend per share in 2026 will return to the 2024 level of 3,520 won. Given that SK Telecom's dividend payout ratio was 70% in 2023 and 60% in 2024, there is a strong possibility that the company may use this opportunity to lower it." NH Investment & Securities forecasts SK Telecom's dividend per share for next year at 2,800 won, which would represent a payout ratio of about 54%.

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