Hana Securities on the 29th said visibility in the artificial intelligence (AI) business for SK Telecom(017670) will lead to earnings and dividends growth. It kept a "buy" rating, a target price of 140,000 won, and top pick in the telecommunications services sector.
Kim Hong-sik, an analyst at Hana Securities, said, "SK Telecom is expected to report strong results for the second-quarter earnings season," and added, "With the establishment of a special-purpose company (SPC) for the AI data center (AIDC), expectations are rising for growth in the dividend per share (DPS) as dividend inflows from subsidiaries increase."
Hana Securities estimates SK Telecom's second-quarter operating profit on a consolidation basis this year at 567.8 billion won, up 68% from a year earlier and 6% from the previous quarter, likely beating market consensus. Along with higher mobile service revenue, reduced personnel and related expenses from headcount cuts are seen driving the improvement.
Hana Securities also saw SK Telecom's ongoing AI business as a strong catalyst for the stock. SK Telecom has set up SK Hyper, a new AIDC-focused entity, and plans to invest 750 billion won by 2030.
Kim said, "SK Hyper will be operated as an SPC, which will make revenue and profit by business site clearly visible," and added, "Because SPC profits are likely to translate into higher SK Telecom dividends or share buybacks and cancellations, the larger the surplus, the more positive the impact on the stock."
The strengthening of the AI base station and network (AI RAN) business in line with the government's goal of becoming a top-three physical AI power was also cited as a positive. Kim said, "With the full-scale rollout of 5G SA (standalone mode), the first new 5G plans in seven years could be discussed," adding, "This will lead to growth in average revenue per user (ARPU) and an expansion in the multiple."
Kim added, "Recently, SK Telecom's stock is being perceived not as a simple defensive play but as an AI base station-related name, showing a differentiated pattern from rivals," and said, "Given the expected dividend yield of 3.5% and the potential for future dividend growth, it is highly likely to rebound sharply when tech stocks bounce in August."