The writer is an analyst of NH Funding & Securities. He could be reached at jaemin.ahn@nhqv.com. — Ed.
Constructing on the stable earnings ballast supplied by its wi-fi enterprise, SKT has entered a number of new enterprise arenas, together with subscription companies, metaverse, IDC, AI, and UAM ventures. Relatively than specializing in short-term earnings, we advise buyers to pay attention extra on the sturdy mid/long-term progress expectations in the direction of these new endeavors.
Progress expectations excessive towards not solely subscription companies and ifland, but additionally UAM and AI
We preserve a Purchase score and a TP of W65,000 on SK Telecom (SKT). Profitability on the agency’s wi-fi enterprise continues to enhance on the again of 5G subscriber progress. With gross sales at its new companies (T Universe (subscription service), ifland (metaverse platform), and IDC (information middle)) rising steadily, SKT continues to search out stable earnings producing streams.
Mid/long-time earnings progress expectations are additionally excessive towards SKT’s city air mobility (UAM) and AI domains. SKT showcased a simulated digital expertise of UAM at CES 2023, and the corporate has additionally solidified its partnership with Joby Aviation. With SKT’s AI companies being expanded via Adot (AI assistant), we plan to trace the platform’s evolvement in offering quite a lot of user-customized content material and creating personalised pathways to SKT’s varied different companies.
4Q22 preview: OP to reach sluggish
On a consolidated foundation, we estimate total 4Q22 gross sales of W4.38tn (+2.0% y-y, +0.9% q-q) and OP of W277.2bn (+22.3% y-y, -40.5% q-q), with OP lacking consensus of W305.0bn. Even when excluding the reserving of hefty one-off worker incentives in 4Q21, we imagine that SKT’s 4Q22 outcomes will lack the general OP progress (y-y) steam seen all through the remainder of 2022.
On a non-consolidated foundation, we see 4Q22 gross sales of W3.16tn (+3.0% y-y, +1.3% q-q), with gross sales progress remaining on a secure uptrend due to additional rise in 5G subscriber numbers. Wi-fi ARPU seemingly dropped barely to W30,603 (-0.4% y-y, -0.1% q-q). Whereas considerations are in play concerning a current climb within the variety of MVNO subscribers, we level out that this improvement additionally means SKT can be: 1) relieved of presidency strain to chop communication charges and; 2) in a position to cut back the variety of cherry pickers (who incessantly migrate between cell carriers relying on handset subsidy affords).
On a non-consolidated foundation, we anticipate SK Broadband to file 4Q22 gross sales of W1.05tn (+3.0% y-y, +1.3% q-q) and OP of W79.3bn (+38.1% y-y, -0.5% q-q). Though the tempo of dwelling purchasing SO fee progress has slowed, the agency’s IDC gross sales look like rising steadily, an element which ought to usher in profitability enchancment in 2023.