KT seen recovering in Q4... KRW 75,000 target price maintained

[Financial News] IBK Investment & Securities said on the 11th that although KT’s third-quarter operating profit fell short of market expectations, earnings are expected to recover starting in the fourth quarter as costs for follow-up measures after a cybersecurity incident and the base burden from property sales revenue recognized the previous year ease. It maintained its “Buy” recommendation and KRW 75,000 target price.
Kim Tae-hyun, an analyst at IBK Investment & Securities, said he expects earnings to enter a recovery phase starting in the fourth quarter, as most of the related costs and base-effect pressure have been absorbed. He estimated KT’s fourth-quarter consolidated revenue at KRW 6.8541 trillion, up 0.1% year on year, and operating profit at KRW 401.7 billion, up 76.7%.
KT’s third-quarter consolidated revenue was KRW 6.9975 trillion and operating profit was KRW 505.3 billion, down 1.8% and 6.1%, respectively, from a year earlier. Analyst Kim said revenue was in line with market expectations, while operating profit came in about 5% below the expected KRW 534.7 billion. He said the customer appreciation program continued to have an impact through July, while KRW 100 billion in revenue from property sales in Jayang-dong, recognized in the same period a year earlier, also created a base-effect burden.
Kim said average revenue per user (ARPU) fell 2.6% year on year to KRW 34,394, affected by the customer appreciation program, which included providing 100 GB of free data each month. Wireless service revenue over the same period fell 4.0% to KRW 1.738 trillion. KT’s standalone operating profit declined 12.2% to KRW 299.3 billion. Kim said the decline in standalone profit had continued for three consecutive quarters as costs for follow-up measures after the cybersecurity incident, including SIM card replacements and waivers of early termination fees, were reflected.
Operating profit at group companies, including consolidation adjustments, rose 4.4% year on year to KRW 206 billion. Kim said KT Estate’s revenue increased 39.1% on growth in its hotel business and the recognition of property sales revenue, while revenue at its content subsidiaries and kt cloud rose 12.1% and 7.7%, respectively.
[email protected] Choi Doo-seon Reporter