Market: KOSPI (017670)
Brokerage : Daishin Securities
Analyst : Hoi-jae Kim
Investment Rating : BUY (Upgraded)
Target Price : KRW 97,000 (Upgraded)
Core Momentum : Overcoming security disruption headwinds via 4Q25 results and restoring annual operating profit to KRW 1.76 Trillion through cost efficiencies, alongside the introduction of tax-exempt capital reduction dividends restoring effective 2026E DPS to historical payout levels.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Upgraded to BUY, 6-Month Target Price upgraded by +45% to KRW 97,000 (Based on the February 5, 2026 closing price of KRW 77,500)
- Target Price Methodology:
- Applied a Target PER of 13x (30% premium to the 5-year peer average of 10x for KT and LGU+) to 2026E EPS of KRW 7,450
- 2026E EPS incorporates the valuation of investment asset Anthropic (assumed at ~KRW 1.0 Trillion)
- Target PER upgraded as dividend uncertainty has been substantially eliminated
- 4Q25 Earnings Review:
- Consolidated Revenue: KRW 4.329 Trillion (~KRW 4.3 Trillion in text, -4.1% YoY, +8.8% QoQ, meeting market consensus of KRW 4.396 Trillion)
- Consolidated Operating Profit: KRW 119.0 Billion (~KRW 120.0 Billion in text, -53.1% YoY, +145.9% QoQ, beating consensus of KRW 110.0 Billion)
- Net Profit: KRW 113.0 Billion (-61.3% YoY, turned profitable QoQ)
- FY2026 Full-Year Forecast:
- Annual Revenue: KRW 17.621 Trillion
- Annual Operating Profit: KRW 1.760 Trillion (+64% YoY, approaching the FY2024 baseline of KRW 1.82 Trillion)
- Annual Net Profit (Controlling Interests): KRW 1.600 Trillion
- 2026E EPS: KRW 7,450 / BPS: KRW 58,663 / ROE: 13.4% / PER: 7.2x / PBR: 1.3x
- Dividends & Shareholder Returns:
- Projected FY2026 DPS: KRW 3,320 (KRW 830 each for 1Q–3Q, KRW 1,050 for 4Q)
- Tax-exempt capital reduction payouts will take effect starting from the 4Q26 dividend upon AGM approval in March 2026, providing an effective after-tax value of approximately KRW 3,600 (fully recovering and matching the FY2023–2024 baseline of KRW 3,540)
🚀 2. [Market Opportunities & Business Outlook]
- Overcoming Incident Disruptions & Profit Recovery:
- Wireless service revenue registered KRW 2.99 Trillion (-7% YoY) in 4Q25, with FY2026 wireless revenue projected at KRW 10.4 Trillion (+4% YoY).
- While full-year revenue (KRW 17.6 Trillion) will fall short of FY2024 due to subscriber losses, rigorous cost control will restore annual operating profit to KRW 1.76 Trillion (approaching FY2024’s KRW 1.82 Trillion).
- Tax-Exempt Dividends via Capital Reserve Reduction:
- Under the policy of returning over 50% of consolidated net profit, the FY2026 DPS of KRW 3,320 represents a 60% payout ratio on normalized net profit (matching 2024’s payout ratio).
- Reducing capital reserves (additional paid-in capital) enables tax-exempt dividends starting from 2027 (including 4Q26 payouts), resolving dividend uncertainties.
- Effective Dividend Value Restoration:
- The FY2026 DPS of KRW 3,320 restores absolute dividend amounts to 2015–2022 levels (~KRW 3,300) while matching the after-tax net cash value of FY2023–2024 payouts (delivering an effective value of ~KRW 3,600 under tax-exempt treatment).
📝 Editor’s Comment (Perspective)
The analyst views SK Telecom as an operator successfully navigating past 4Q25 cybersecurity incident disruptions through disciplined cost management to rebuild its annual operating profit run-rate to KRW 1.76 Trillion, while innovatively deploying capital reduction dividends to restore the effective after-tax value of its 2026E DPS (KRW 3,320, delivering ~KRW 3,600 in effective after-tax value) to pre-incident levels. This perspective recognizes the removal of dividend overhang and the inclusion of Anthropic’s equity value (~KRW 1.0 Trillion) as primary justifications for upgrading the investment rating to BUY and hiking the target price by 45% to KRW 97,000.
To evaluate whether this investment thesis materializes, key verification points include confirming that cost controls deliver the projected FY2026 KRW 1.76 Trillion operating profit and KRW 1.6 Trillion net profit, verifying the approval of capital reserve reductions at the March 2026 AGM to implement tax-exempt dividends from 4Q26, and tracking the quarterly execution of the KRW 3,320 DPS roadmap. These developments can be monitored via upcoming quarterly earnings releases, official IR presentations, and periodic DART statutory filings.
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Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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