Meritz Securities on the 16th raised its investment rating for SK Telecom(017670) to Buy from Hold, reflecting an earnings recovery and the normalization of dividends. It also lifted the target price to 110,000 won from 98,000 won. SK Telecom's closing price the previous day was 85,000 won.
Jeong Ji-su, a Meritz Securities analyst, said, "We raise our investment rating to Buy in light of the earnings recovery and the resumption of dividends," and noted, "We raised the fair value to 110,000 won, reflecting an increase in the non-operating value, including the higher valuation of Anthropic."
Jeong estimated that SK Telecom's consolidated revenue in the second quarter of this year will be 4.3703 trillion won, up 0.7% from a year earlier. Operating profit is projected at 535.5 billion won, up 58.3%, in line with the market consensus of 542.5 billion won.
The analysis is that the wireless business performance is improving steadily as the increase in 5G subscribers since the waiver of penalty fees was implemented in Jan. has been maintained. The 5G subscriber penetration rate in the second quarter is expected to rise to as high as 81.8%, and average revenue per wireless user (ARPU) is also expected to increase slightly from the previous quarter. Marketing expense is being managed at a level similar to last year, and separate operating profit is expected to grow 63.8%.
Subsidiary SK Broadband's business-to-business (B2B) operations are also expected to continue growing. As corporate business revenue increases centered on data centers, second-quarter operating profit is forecast to reach 118.4 billion won, up 29% from a year earlier.
Full-year consolidated operating profit this year is expected to be 1.9172 trillion won, up 78.6% from last year. SK Telecom's separate operating profit is estimated at 1.5004 trillion won, and SK Broadband's at 439.9 billion won, up 84.8% and 52.3%, respectively.
In particular, the data center business was assessed as a medium- to long-term growth engine. Jeong said, "Although current data center IT capacity is small compared with competitors, when the Ulsan data center and the Seoul 3 data center are completed in 2027 and the colocation business gets into full swing, it will contribute meaningfully to results."
The attractiveness of dividends is also expected to rise again. Meritz Securities projected the second-quarter dividend per share (DPS) at 830 won, the same as the previous quarter, and the full-year DPS at 3,320 won. While the annual dividend amount is lower than in 2024 (3,540 won), the application of reduced-tax dividends means shareholders' net receipts will actually improve.