KT shares tumble on negative brokerage report

[Photo by Yonhap]

Shares of KT Corp., South Korea’s second-largest wireless carrier, fell Thursday after a report from a securities firm gave a sell recommendation, citing low dividends and weak earnings outlook for 2024.

Shares of KT were trading at 35,500 won ($27.3) as of 10:05 a.m. on Thursday, down 1.25 percent from the previous session. The stock fell after rising on Tuesday and Wednesday.

“Considering the earnings flow and regulatory environment, it is unlikely that KT’s stock price will reach 40,000 won next year,” said Kim Hong-sik, an analyst at Hana Securities Co. “It would be better off to sell the stock as soon as possible.”

Kim suggested a neutral rating on KT and a target price of 33,000 won.

“The price-to-book ratio (PBR) of 0.6 times and expected dividend yield of 5.4 percent are not attractive at all, given the company’s low return on equity (ROE), declining profits, and potential dividend stagnation,” Kim said. “As the company enters the fourth quarter earnings season, concerns rise that its profit will drop from next year.”

The analyst noted that the firm believes that the decline in mobile phone sales will gradually widen on reduced breakage income amid tightened rate regulations, and rising labor and operating costs will remain an issue next year.