On Thursday, JPMorgan maintained an Overweight rating on KT (NYSE:KT) Corp. (030200:KS) (NYSE: KT) stock and increased the price target to KRW 53,000 from KRW 44,000. The adjustment reflects the anticipated benefits of the company's recently announced labor restructuring.
The firm projects a significant enhancement in shareholder returns due to the restructuring, which includes early retirement for 3,000 employees and the reallocation of 3,800 employees to new subsidiaries in the fourth quarter of 2024. Following these changes, JPMorgan anticipates a 27% and 20% rise in consolidated and parent net profit forecasts for 2025, respectively.
The analysis by JPMorgan estimates an adjusted parent net profit growth from KRW 1.05 trillion in 2024 (excluding early retirement program costs) to KRW 1.4 trillion in 2025. This increase is expected to result in a dividend per share of KRW 2,800, based on a 50% total payout ratio in line with the latest shareholder policy and a 100% cash dividend mix. This scenario would lead to a 6.6% dividend yield.
Additionally, KT Corp . is expected to carry out an extra share buyback of KRW 300 billion in 2025, fueled by potential gains from property development. This would indicate a total shareholder return of 9.4% for that year. JPMorgan recommends KT Corp. as a top pick within the Korean telecommunications sector due to the promising earnings growth outlook and potential for additional shareholder returns. The firm also anticipates KT Corp. will announce its "value-up policy" in the near future.
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