Hana Securities said on the 28th that expectations for improved earnings and a sharp rise in this year's dividend per share (DPS) at SK Telecom are likely to grow. It maintained a "Buy" rating and a target price of 140,000 won, and named it the top pick in Korea's telecommunications services sector. The previous day's closing price of SK Telecom was 98,000 won.
As reasons for recommending SK Telecom, Hana Securities first cited the outlook for solid first-quarter revenue and operating cost trends, which it said will lift expectations for earnings improvement. It also said that an early normalization of the first-quarter dividends will heighten expectations for a sharp DPS increase this year.
Kim Hong-sik, a Hana Securities researcher, said, "Considering that the shift to the 5G standalone (SA) era is gaining traction, the stock price remains attractive," and noted, "This year, it is expected to post the most notable growth in profit and dividends among the three telecom companies."
It also said the surge in telecom equipment stocks is feeding into gains in telecommunications services shares, so SK Telecom—with a high proportion of mobile service revenue and a low foreign ownership ratio—has a high chance of attracting buying from investors.
It projected that first-quarter results will be solid. Hana Securities forecast consolidated operating profit of 523.1 billion won, down 8% on-year, which is expected to beat the consensus (the average of securities firms' estimates, 506.9 billion won).
Kim said, "With first-quarter results likely to be better than initially expected, expectations should rise for annual consolidated operating profit of 1.9 trillion won this year and performance exceeding 2024," adding, "With first-quarter DPS to be announced between 800 and 900 won and annual earnings forecasts shaping up well, investor confidence in this year's DPS of 3,600 won should strengthen, keeping the stock on an upward trajectory during earnings season."