Eugene Securities maintained a 'buy' investment opinion on KT and raised its target price from 62,000 won to 66,000 won on the 10th. However, it noted that most of the factors that could drive the stock price up, such as improvements through restructuring, have already been absorbed, leading to a forecast of weaker upward momentum compared to the first half of the year.
Lee Chan-young, a researcher at Eugene Securities, noted this in a report on KT titled 'It's time to proceed.' The researcher estimated that KT's consolidated revenue and operating profit for the second quarter of this year (April to June) would be 7.1795 trillion won and 908.5 billion won, respectively, which exceeds market expectations.
The researcher said, 'The profits from the project for the 'KT site complex development in the area of Gwungjin-gu, Seoul' are expected to be reflected earlier than anticipated, which will drive the second quarter's performance.'
The researcher expected that KT would benefit from the positive effects following the hacking incident involving subscriber identity modules (USIM) at SK Telecom starting in the third quarter (July to September). He also anticipated that collaborations with global big tech companies in artificial intelligence (AI) and cloud services, along with AI transformation (AX) consulting, would begin in earnest in the third quarter.
However, the researcher predicted that the expectations for shareholder returns, which had previously boosted KT's stock price, would diminish. He stated, 'Although liquidating non-core assets to secure funds for shareholder returns is a valid long-term investment point, the short-term feasibility is low,' and added, 'It's also disappointing that the stock buyback is ending this month.'
The researcher ultimately stated that AI will be key. He said, 'The competition in the domestic AX market is intensifying, and due to a lack of capacity validation, the expectations related to AI are not yet reflected in stock prices. However, if meaningful results can be produced in a situation where all three telecommunications corporations lack clear long-term growth momentum, it could be a differentiating factor for reassessing corporate value.'