[Alpha Biz= Paul Lee] NH Investment & Securities announced on the 18th that it maintains a “Buy” rating on SK Telecom, raising its target price from KRW 63,000 to KRW 65,000. The firm's previous closing price was KRW 56,400.



The firm assessed that subscriber outflows due to the recent cybersecurity breach have largely ended. As of July 14, about 1.05 million subscribers had left SK Telecom under penalty-free contract termination terms, resulting in a net decrease of approximately 730,000 subscribers after new sign-ups are taken into account.



Analyst Jae-min Ahn stated, “While the incident damaged the company’s image and led to significant subscriber loss, the worst seems to be over, and a recovery is now expected.” He added that although the subscriber loss is painful, SK Telecom managed to minimize it through large-scale compensation programs implemented since August.



Initially, NH Investment & Securities had expected as many as 1.2 million subscriber losses and over KRW 200 billion in penalty-related costs. However, Ahn noted that actual losses are likely to be below those estimates, prompting an upward revision of the company’s earnings forecast and target price.



For full-year 2024, SK Telecom’s operating profit is projected to decline 35.9% year-on-year to KRW 1.17 trillion. Despite the sharp earnings decline, the stock has remained resilient, supported by expectations that dividend payouts will be maintained.



SK Telecom currently offers a dividend yield of 6.3% based on its annual dividend of KRW 3,540 per share. “If the board confirms a semiannual dividend of KRW 830 at the end of July, this would signal no further downside risks,” Ahn concluded.
 

 

 

 

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