LG Uplus: Focus More on Higher Dividend Than One-off Labor Cost 




The author is an analyst of KB Securities. He can be reached at   joonsop.analyst@kbfg.com. — Ed.

 

4Q21 review: OP of KRW158.2bn below market consensus 

— LG Uplus posted 4Q21 consolidated OP of KRW158.2bn, coming in below the market consensus of KRW203.0bn.

— The lower-than-expected earnings was attributable to one-off bonus payments (~KRW65.0bn) as the overall ICT industry faces rising labor costs.

— Stripping out the one-off payments, OP would have reached KRW218.2bn, which is substantially higher than 4Q20 OP of KRW175.5bn. 

Improved shareholder return policy

— In its 4Q21 earnings release, LG Uplus announced 2021 DPS of KRW550 (or KRW350 excl. interim dividend of KRW200), up 22% vs. 2020 DPS of KRW450.

— The company said it would raise its payout ratio to 40% from 30% (in terms of standalone NP). 

Steady increase in B2B earnings 

— The Solution business (e.g., smart factory, smart mobility) saw 4Q21 revenue improve 25.4% QoQ/10.2% YoY to KRW144.7bn.

— LG Uplus stated in its 2Q21 earnings release that it plans to raise the revenue proportion of non-telecom business (incl. new businesses) to 30% in 2025 (vs. 20% at present). 

Continual uptrend in MVNO subscriber number

— The no. of MVNO lines increased 286,000 QoQ in 4Q21 (+49.1% YoY, +11.2% QoQ). — The MVNO service has seen marketing costs decline, so growth in MVNO subscribers should contribute to earnings improvement.   



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