Korea Investment & Securities assessed KT's second-quarter performance on the 12th as flawless, predicting that performance improvement will continue in the third quarter. It maintained an investment opinion of 'buy' and a target price of 69,000 won. KT's previous closing price was 54,100 won.
KT recorded a consolidated revenue of 7.4 trillion won and an operating profit of 1 trillion won for the second quarter of this year. This represents increases of 13.5% and 105.4%, respectively, compared to the same period last year. The operating profit exceeded Korea Investment & Securities' estimate and the consensus (performance forecast) by 12% and 17%, respectively.
Kim Jeong-chan, a researcher at Korea Investment & Securities, noted, "The main background for exceeding expectations was the significant recognition of one-time real estate sales revenue at 764 billion won, which was much larger than anticipated," adding, "Even excluding one-time factors, the separate performance reflected revenue of 4.7 trillion won and operating profit of 468.7 billion won, achieving the highest quarterly operating profit due to labor cost savings from organizational restructuring."
He also assessed that KT's core communications business is solid while its new businesses are growing. Researcher Kim stated, "In the second quarter, the handset market share increased by 0.5 percentage points to 23.8%, and the number of 5G subscribers rose by 310,000 to 10.87 million, bringing the 5G penetration rate to 79.5%," noting, "In the case of corporations' service revenue, artificial intelligence (AI) and IT revenue drove the performance."
He evaluated that it is a time when the fast growth strategy through partnership is becoming visible, with the upcoming launch of the Serviced Private Cloud (SPC) in collaboration with Microsoft (MS).
Researcher Kim explained, "In the third quarter, performance improvement is expected to continue as the remaining portion of real estate sales revenue is reflected," adding, "On a standalone basis, the new subscriber performance from April to June will be reflected, leading to increased wireless and wireline revenue, while expense efficiency continues to improve profitability."