[Click e-Stock] "LG Uplus Expected to Maintain Solid Stock Performance... Target Price Unchanged"

On November 6, Shinhan Investment Corp. maintained its "Buy" investment rating and a target price of 16,500 won for LG Uplus, stating that next year's standalone operating profit and net income are expected to exceed previous forecasts.

On the same day, Shinhan Investment Corp. analyst Kim Aram said, "We have raised our estimates for next year's standalone operating profit and net income by 5% each, and increased the dividend per share (DPS) from 660 won to 730 won." The expected shareholder return yield for next year is 6.2%.

The third quarter operating profit was 161.7 billion won, down 34% year-on-year, slightly below the market consensus. Analyst Kim pointed out, "It should be noted that the market consensus did not fully reflect the one-off cost of 150 billion won related to voluntary retirement," adding, "Compared to the recent one-month average forecast of 143.2 billion won, the results were above expectations."

LG Uplus also benefited from SK Telecom's issues. Analyst Kim stated, "Growth rates improved across all segments: wireless (up 5% year-on-year), internet (up 8%), and IPTV (down 0.4%). Marketing expenses (up 9%) increased in proportion to the rise in subscribers, but the ratio of marketing expenses to service revenue remained stable. The artificial intelligence (AI) data center (data center, up 15%) returned to double-digit growth."

Next year's operating profit is forecast at 1.208 trillion won, a 28% increase from the previous year. Analyst Kim commented, "Looking at the operating profit trends over the past two quarters, which reflect the impact of the SK Telecom hacking incident and the disposal of low-profit businesses, annual profit-generating capacity appears to have increased by more than 150 billion won compared to before."

Standalone operating profit, excluding device margins and one-off costs, increased by 47.5 billion won in the second quarter and 41.9 billion won in the third quarter compared to the same periods last year. Additionally, considering at least 60 billion won in labor cost savings (assuming 600 voluntary retirees multiplied by an average annual salary of 100 million won), dividend growth in 2026 could be significant. LG Uplus distributes more than 40% of its standalone net income as dividends.

Analyst Kim added, "Given the high visibility of increased shareholder returns, foreign investor preference is expected to continue," and noted, "Once hacking concerns are resolved, this will be an exceptionally stable telecom stock."

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