KT stock value likely to double by 2022, analysts say

South Korea’s telecom and content giant KT Corp. is receiving renewed interest this year among stock market investors and financial analysts, following more than a 10-year slump in its share price since 2010.

Market analysts say that the company’s stock price is projected to surpass 50,000 won ($44.3) per share by next year, more than double its closing price on the first trading day of 2021 at 23,800 won ($21.1).

The last time its share price supassed the 50,000 won level was in 2010. Its price slipped and hovered around 30,000 won ($26.6) in 2014 and dipped as low as 17,650 won ($15.6) in 2020 after the outbreak of COVID-19.

This year, however, KT’s stock price has been making a big rebound thanks to its strong earnings and positive market outlook due to its affiliates, including Korea’s first internet-only bank K Bank.

KT’s share price closed at 31,100 won ($27.6) on May 21, up by more than 30% from the first trading day of this year.  

ANALYST REPORT HIGHLIGHTS

Hana Financial Investment’s recent report said that KT’s stock price will reach 40,000 won a share ($35.4) by the end of this year and surpass 50,000 won ($44.3) next year.

The securities firm stated three main reasons for the price projection.

First, KT’s earnings are expected to grow even more by next year, as the average revenue per user (ARPU) is rising while labor and marketing costs will likely stay at similar levels. Hana Financial estimated KT’s 2022 operating profit to be 1.59 trillion won ($1.41 billion), up 34% from its 2020 figure at 1.18 trillion ($1.05 billion).

Second, its high dividends, which are expected to rise even higher, makes the stock an attractive buy. KT’s dividend per share was 1,350 won ($1.2) last year and is expected to reach 1,800 won ($1.6) next year, giving investors a 3.6% dividend ratio even when its stock price reaches the target price of 50,000 won ($44.3).

“KT’s stock price will continue to rise, granting that its dividend ratio remains below the 4% level,” according to the Hana Financial Investment report.

The third reason cited in the report is that its affiliates are expected to post strong results. KT’s content creation unit Studio Genie is set to strengthen its collaboration with The Walt Disney Company. KT’s internet bank, K Bank, is also growing fast with an IPO target by 2023.

“KT’s market value will see an immense rise once its key affiliates kick off their listing processes."  

Write to Eui-myung Park at euimyung@hankyung.com
Daniel Cho edited this article.