KT: Data center contract a catalyst for share-price rebound; target price maintained at 73,000 won

[Financial News] On the 15th, Eugene Investment & Securities said it expected near-term earnings improvement at KT to be limited, but forecast that the company could be revalued if the results of its data center business become visible. It maintained its “Buy” rating and target price of 73,000 won. Lee Chan-young, an analyst at Eugene Investment & Securities, said, “Expectations for the data center business are not reflected in the current share price,” and analyzed that “the share-price trend could reverse quickly if results related to data centers become more concrete.” He added, “A colocation contract with a global top-tier neocloud operator, expected to be announced this year, is a catalyst for a share-price rebound.”
KT’s consolidated revenue for the third quarter of this year was estimated at 7.1174 trillion won, with operating profit at 512 billion won. The figures were expected to be down 0.1% and 4.9%, respectively, from the same period last year, coming in slightly below market expectations.
Lee said, “Lower profitability in the wireless business due to the customer compensation program, which continued through July, and increased selling expenses weighed on earnings,” adding that “wireless revenue will decline 2.4% year on year as average revenue per user (ARPU) falls, and the amortization burden from higher selling expenses amid intensified competition in the mobile number portability market last year will continue.” Selling expenses were expected to rise 3.2% year on year.
Over the medium to long term, attention turned to execution of the strategy to expand AI infrastructure. Lee emphasized that “KT’s plan to secure an additional 1 GW of data center capacity is underway,” adding that “growth expectations could become more tangible as data centers begin generating revenue one by one in the future.”

[email protected] Choi Du-seon Reporter