Brokerage : Yuanta Securities
Analyst : Seungwoong Lee, Koeun Kim (Research Assistant)
Investment Rating : BUY (Maintained)
Target Price : KRW 73,000 (Maintained)
Core Momentum : Telecom core business normalization, AX business expansion driven by large-scale investments in AIDC and submarine cables, and valuation re-rating supported by asset optimization and ROE improvement
📊 1. [Valuation & Key Financial Metrics]
- Rating & Target Price: BUY (Maintained) / KRW 73,000 (Maintained)
- Key Valuation Multiples (2026F):
- PER: 9.7x
- PBR: 0.7x
- EV/EBITDA: 3.4x
- ROE: 7.6%
- Consolidated Financial Highlights & Forecasts (K-IFRS):
- 2024A: Revenue KRW 26.43T, Operating Profit KRW 809.0B, Net Profit (Controlling) KRW 470.0B
- 2025A: Revenue KRW 28.24T, Operating Profit KRW 2.47T, Net Profit (Controlling) KRW 1.73T
- 2026F (Forecast): Revenue KRW 27.43T, Operating Profit KRW 2.08T, Net Profit (Controlling) KRW 1.37T
- 2027F (Forecast): Revenue KRW 27.91T, Operating Profit KRW 2.26T, Net Profit (Controlling) KRW 1.46T
🚀 2. [Market Opportunities & Business Outlook]
- Q2 Earnings Review:
- Consolidated Q2 revenue stood at KRW 6.68T (-10.1% YoY) and operating profit reached KRW 648.0B (-36.1% YoY), beating consensus (KRW 604.0B) by 7.4%.
- Earnings contracted YoY primarily due to high base effects from prior real estate development sales, but subsidiary profit contributions reached KRW 259.3B, topping the initial estimate of KRW 170.0B.
- Group performance was supported by pre-sale recognition in Dunsan (Daejeon) and asset sales at kt estate, content subsidiary revenue of KRW 166.4B (+16.0% YoY), and kt cloud revenue of KRW 265.4B (+19.8% YoY).
- Wireless service revenue was KRW 1.70T (-1.8% YoY) with an ARPU of KRW 34,412 (-2.3% YoY, -1.1% QoQ); subscriber metrics are projected to enter a recovery phase starting in 3Q26.
- Medium- to Long-Term AX Growth & Infrastructure Strategy:
- Management presented a target to expand the revenue contribution of its AX business from 6.9% in 2025 to 14.0% by 2028.
- Investment plans include committing KRW 5.0T over 5 years to expand AIDC receiving capacity up to 1.15GW, alongside KRW 1.0T for submarine cable capacity expansion from 38Tbps to 128Tbps.
- Post-incident normalization in telecom operations, visible AX expansion, and ROE improvements from non-core asset monetization are expected to drive structural valuation re-rating.
📝 Editor’s Comment (Perspective)
The analyst views KT as an evolving digital transformation and infrastructure provider transitioning toward high-growth AX services, supported by normalized telecom operations and real-demand infrastructure investments in AIDC and submarine network assets. This perspective places greater emphasis on asset portfolio optimization, structural ROE improvement through non-core asset monetization, and the targeted expansion of AX revenue than on transient quarterly ARPU softness or high real estate base effects.
To verify whether this investment thesis unfolds as anticipated, key monitoring points include whether wireless ARPU and subscriber metrics successfully rebound starting in 3Q26, whether the company demonstrates measurable progress toward its 14.0% AX revenue target by 2028, and the execution milestones of planned capital expenditures in AIDC (1.15GW capacity) and submarine cable capacity (128Tbps). Relevant updates can be verified through subsequent quarterly earnings releases, official IR materials, periodic regulatory filings, and corporate business reports.
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