[Click eStock] "KT Expected to Benefit from Policy with Overwhelming Dividend Yield... Target Price Up"

On December 3, Hana Securities maintained its 'Buy' investment rating on KT and raised its target price to 70,000 won, stating, "The expected dividend yield is overwhelmingly high, making KT a prime beneficiary of Korea's value-up policy."

Kim Hongsik, a researcher at Hana Securities, wrote in a report that day, "KT has consistently maintained a dividend payout ratio of around 50% at the headquarters level, and this year's dividend per share (DPS) growth rate reaches 20%." He also analyzed, "It is highly unlikely that KT will be excluded from the separate taxation benefit for the next three years."

He added, "The costs related to hacking have already been largely reflected in future earnings estimates, and the probability of changes to value-up policies due to the replacement of the CEO is low." He further emphasized, "The policy of separate taxation on dividends for 2026 to 2028 is virtually confirmed. While there is a possibility of changes in detailed policy, it has become highly likely that the mandatory retirement of treasury shares will be legislated." He continued, "The expected pre-tax dividend yield is 7.5%, and for dividends of less than 20 million won, the after-tax yield is 6.3%, which is extremely attractive."

The dividend per share for next year is expected to increase. From January to April this year, KT's share price rose by 30%, significantly outperforming the market, mainly because the first-quarter dividend per share was raised to 600 won. Kim noted, "Based on the current policy direction, the first-quarter dividend per share in 2026 is projected to increase significantly to 900 won, raising expectations."

He pointed out, "Currently, the foreign ownership limit for KT has been fully utilized for an extended period, so if the mandatory retirement of treasury shares is legislated, the company may face difficulties in handling its treasury stock. Therefore, it is unlikely that KT will pursue additional treasury stock purchases next year." He emphasized, "Ultimately, the only remaining option is to distribute the entire shareholder return amount as dividends."

KT had planned to pay out 50% of its headquarters net profit as dividends and to execute treasury stock purchases and retirements totaling 1 trillion won from 2025 to 2028, with 250 billion won each year. If all the treasury stock retirements are converted into dividend payments, the total dividend next year is expected to reach 950 billion won, and the first-quarter dividend per share is likely to increase by 50% year-on-year.

Kim cited the fact that the share prices of domestic telecom companies in 2024 and 2025 moved in line with the total shareholder return or total dividend payout, predicting that KT's share price next year will be at least 70,000 won. He added, "The inability to retire treasury shares has been a factor in valuation discounts, but this will normalize. Considering that the dividend per share growth rate in 2026 is 58%, the increase over the past two years is 90%, and the share price has only risen 45% over the same period, at least a 45% share price increase is possible next year."

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