reports
- Chris Hoare
LG Uplus (Buy, TP: KRW 19,000, +71%) New Corporate Value Up Plan, mod...
Yesterday, LG Uplus announced its new Corporate Value Up plan, in conjunction with the appointment of a new CEO in 2025, Hong Bum-Sik who is the company’s current head of corporate strategy. We think the plan is modestly positive but not as transformational as KT’s. Our brief thoughts below.
- Chris Hoare
- Chris Hoare
KT Corp (Buy, TP: KRW 70,000, +68%) Q3 24 Quick Take: Top line impacte...
KT saw weaker service revenue but better headline EBIT and bottom-line growth from a lower base last year. Mobile kept steady and core B2B inflected to growth despite restructuring efforts, service revenue trend was impacted again by weakness in Content and BC Card.
- Chris Hoare
SK Telecom (Buy, TP: KRW 100,000, +74%) Q3 24 Quick Take: Encouraging...
SK Telecom saw revenue accelerate again on the back of B2B Enterprise demand. Mobile also kept steady as the environment stayed benign. Notably, capex spend remains disciplined while operating profit was up 7.1% YoY off lower depreciation and continued cost control. The recently announced Corporate Value Up plan was largely expected.
- Chris Hoare
KT Corp (Buy, TP: KRW 70,000, +59%) New Corporate Value Up Plan Repre...
Following SK Telecom’s plan to improve corporate value, KT has highlighted three priorities to further its corporate value yesterday. Building up to its 9-10% return on equity target by 2028, it aims to build up its AICT contribution and improve EBIT margin to 9%, optimise latent value from non-core assets and has also guided for an additional KRW 1tn (US$ 0.72bn) in buybacks/cancellations, in excess of its current 50% shareholder remuneration policy. Our thoughts below.
- Chris Hoare
- Chris Hoare
South Korean Telcos Q2 24 review: Softer but capex moderation remains...
Group service revenue and EBITDA trends were softer in Q2, beset by slower Enterprise growth and a one-off labour cost hike by KT. By contrast, mobile improved to 2.1% YoY, led by SKT and KT. Given the benign mobile landscape and the removal of Stage X’s mobile license, we expect trends to sustain at current levels. Capex spend is under control while quarterly dividends were unchanged. Separately, we have trimmed our target prices for SKT and LG Uplus; KT remains our preferred pick.
- Chris Hoare
KT Corp (Buy, TP: KRW 70,000, +83%) Q2 24 Quick Take: Impacted by one...
Q2 was impacted by a decline in its service revenue and a one-off cost related to an early settlement of wage negotiations (KRW 64bn impact). As a result, the stock was down 2% today. However, some of the bright spots remained – sustained growth in Wireless, profitable Enterprise segments, KT Cloud and continued capex moderation.
- Chris Hoare
LG Uplus (Buy, TP: KRW 21,000, +112%) Q2 24 Quick Take: Decent net ad...
Trends were slower as service revenue and EBITDA missed expectations 1% and 2% respectively. As a result, pressure continue to be felt at the bottom line. Key positives were its Enterprise and broadband momentum and the moderation in capex. Separately, LG had also disclosed an interim dividend of KRW 250/share, unchanged from last year.
- Chris Hoare
SK Telecom (Buy, TP: KRW 116,000, +122%) Q2 24 Quick Take: Encouragin...
SK Telecom saw an acceleration in topline while underlying EBITDA came in 2% ahead. Encouragingly, mobile trends improved on better mix and rise in roaming users while Enterprise, a key focus area, expanded its contribution to near 10% of overall revenue. Focus on AI continues to hold back shareholder remuneration however we think.
- Chris Hoare
South Korean Telcos MSIT may revoke fourth operator's 28 GHz licence
South Korea's Ministry of Science and ICT ("MSIT") is said to be revoking Stage X's 28 GHz spectrum, citing its inability to pay the KRW 205bn (US$ 150m) paid-in capital last month and discrepancies around its shareholders' ownership ratio. Our thoughts below.
- Chris Hoare
South Korean Telcos Q1 24 review: Better service revenue trends, but ...
South Korean operators delivered better service revenue growth, led by improvements in Broadband and Enterprise. As 5G penetration matures (70% in Q1), mobile still managed LSD growth. With improving capital intensity and steadily rising dividends, we remain constructive in this space, with KT remaining as our preferred pick
- Chris Hoare
EM Telcos EM Enterprise Revenues Continue to Grow Strongly
In this note we revisit and update our thesis that Enterprise in EM is following an S-Curve, using 2023 reported figures. Enterprise customer growth continues to exhibit an S-Curve, and absolute Enterprise revenues added remains very strong in many EMs despite a slowdown in growth rates. We remain bullish on this space.
- Chris Hoare
KT Corp (Buy, TP: KRW 70,000, +93%) Q1 24 Quick Take: Better profitab...
Topline trend was better as B2B division improved while KT Cloud and KT Estate sustained double-digits growth again. While the company had earlier announced plans to expand its AI/ICT staff pool by up to 1k this year, so far labour costs remained under control as it is being offset by natural attrition of retirees.
- Chris Hoare
LG Uplus (Buy, TP: KRW 21,000, +110%) Q1 24 Quick Take: Better top li...
LG Uplus’ numbers improved from last quarter. Faster service revenue trend was led by improvements across the board, with continued strength in Enterprise. Bottom line was however weak off higher wage, D&A and interest costs. Our brief takeaway below.
- Chris Hoare
SK Telecom (Buy, TP: KRW 116,000, +126%) Q1 24 Quick Take: Decent top...
Topline came in better than expected, supported by a better mobile performance from higher roaming users well as sustained performance from SK Broadband. EBITDA was relatively in line while net profit beat on expectations this quarter (12% ahead), helped by other income from its investment assets. Our thoughts below.
- Chris Hoare
SK Telecom (Buy, TP: KRW 116,000, +120%) New shareholder return polic...
SK Telecom has issued its new shareholder return policy for the next three years (2024-2026), at least 50% of adjusted consolidated net profit in the form of dividends and share repurchases. The headline figure is somewhat underwhelming, but is now a minimum rather than a cap and could be the first of more initiatives to come as a result of the "Value-up" programme in Korea. Our thoughts below.
- Chris Hoare
- Chris Hoare
South Korean Telcos Takeaways from Meetings with the Korean Telcos in...
We met with all 3 of the Korean Telcos in Seoul over the last couple of days. All 3 are committed to engaging with and following the government “Value-up” programme, with the industry having started to become more shareholder friendly 2-3 years ago. We see the potential for higher industry returns (lower capex, opex) as well as better shareholder remuneration. Change will take time, but patient investors are set to do well from Korea as the market finally finds its place in the sun we think. Top...
- Chris Hoare
South Korean Telcos Q4 23 review: EBITDA improved despite softer serv...
South Korean operators were slower across the board at service revenue on softer Fixed growth, although mobile and Enterprise kept pace. Both LG and SKT saw an acceleration in Enterprise this quarter as the former opened a new DC in Q4. Both SKT and KT saw improvements in EBITDA while LG was pressured by higher labour costs.
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