On Thursday, JPMorgan (NYSE:JPM) maintained its Overweight rating on shares of KT (NYSE:KT) Corp. (030200:KS) (NYSE: KT), while increasing the price target to KRW44,000 from KRW42,000 (1$= 0.00073), he firm's positive outlook on KT Corp is attributed to the company's performance, which has seen its share price rise 5.4% year-to-date, outpacing both SKT and LG Uplus. The increase is seen as a reflection of investor confidence in KT as a potential beneficiary of the South Korean government's 'value-up policy'.
KT Corp's recent decision to cancel a 2% treasury share on May 9, 2024, is viewed as an indicator of a forthcoming shareholder-return-friendly policy under the new CEO. While expectations for further shareholder return programs in the near future have been moderated following the treasury share cancellation, JPMorgan anticipates considerable upside potential for total shareholder return in 2025. This forecast is based on a substantial one-time parent profit from property development.
The firm's positive stance on KT Corp also considers the possibility of a meaningful share buyback and cancellation plan in 2025, although this has not been incorporated into their current estimates. JPMorgan's revised price target comes after adjusting earnings forecasts and discount cash flow (DCF) valuation assumptions. With these updates, KT Corp remains JPMorgan's top pick among Korean telecommunications companies.
InvestingPro Insights
Investors looking at KT Corp may find the current metrics and trends from InvestingPro to be of particular interest. With a market capitalization of $6.52 billion and a price-to-earnings (P/E) ratio of 8.46, KT Corp appears to be trading at a low earnings multiple, which could be appealing to value investors. Notably, the company's P/E ratio has adjusted down to 7.4 over the last twelve months as of Q1 2024, further emphasizing its potential as an undervalued stock. Additionally, KT Corp's price-to-book (P/B) ratio stands at 0.48, suggesting that the stock may be undervalued relative to its book value.
For dividend-seeking investors, KT Corp's dividend yield of 5.54% as of the latest data point in 2024, coupled with a significant 21.87% dividend growth in the last twelve months as of Q1 2024, can be particularly attractive. This is consistent with the company’s history of maintaining dividend payments for 10 consecutive years, as highlighted by one of the InvestingPro Tips. Another InvestingPro Tip points out that the management team has been actively buying back shares, a move that can signal confidence in the company's future and potentially benefit shareholders.
For those interested in further insights and tips, InvestingPro offers additional information on KT Corp, including analysis on revenue growth, profit margins, and more. To explore these insights and take advantage of a special offer, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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