From Defensive to Growth Stock: Target Price Raised as SK Telecom Expected to Lead as AI Infrastructure Architect [Click e-Stock]

Target Price Raised from 110,000 Won to 115,000 Won

On July 27, Meritz Securities announced that SK Telecom is in the process of transforming from a traditional defensive stock to a growth stock, driven by the expansion of its artificial intelligence (AI) business. Accordingly, the target price was raised from 110,000 won to 115,000 won.

Jung Jisoo, a research analyst at Meritz Securities, stated, "SK Telecom will serve as the AI infrastructure architect in SK Group’s medium-to-long-term project to build AI data centers (DC) with a total capacity of 15 gigawatts (GW) currently under review." He emphasized, "The launch of SK Telecom’s new AIDC subsidiary, the attraction of external investment, and long-term contracts with anchor tenants are factors supporting a value re-rating."

He also explained that as the valuation gap between domestic telecom operators and global data center REITs (such as Equinix and Digital Realty) or neo-cloud companies (such as CoreWeave) remains significant, the disparity is expected to narrow rapidly depending on SK Telecom’s future business developments.

Meritz Securities forecasts SK Telecom’s consolidated revenue for the second quarter at 4.3703 trillion won (+0.7% YoY), and operating profit at 535.5 billion won (+58.3% YoY), which is expected to be in line with market consensus.

This year’s expected annual dividend is 3,320 won, which falls short of the 2024 level of 3,540 won. However, the firm analyzed that the shareholders’ effective payout will increase due to the application of a reduced dividend tax.

However, risks include financial burden resulting from large-scale capital expenditures (CAPEX), concerns over dividend reduction, and potential delays in permits and approvals for the AIDC business.

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