[Click eStock] "SK Telecom Maintains Target Price on Strong Earnings Driven by AIDC Momentum"

Second-Quarter Operating Profit Exceeds Market Expectations
"Record-High Profit Margins Expected for This Year and Next"

According to analysis from securities firms, SK Telecom is expected to achieve record-high profitability, driven by a recovery in its core business and growth in its Artificial Intelligence Data Center (AIDC) operations.

On August 11, iM Securities reported that, the previous day, Shin Hee-chul, a researcher at iM Securities, stated, “Following the hacking incident last year, SK Telecom is anticipated to achieve its highest-ever profit margins this year and next through normalization of its main business and ongoing cost efficiencies,” maintaining a “buy” rating and a target price of 112,000 won.

Second-quarter operating profit soared 67% year-on-year... cost efficiency pays off

In the second quarter of this year, SK Telecom posted consolidated revenue of 4.3591 trillion won (up 0.5% year-on-year) and operating profit of 566 billion won (up 67.3%). While sales missed consensus by 1.2%, operating profit exceeded market expectations by about 3.7%. The operating margin reached 13.0%, the highest for any quarter in the company’s history.

Growth in the AIDC business of its subsidiary, SK Broadband (SKB), drove strong results. For the second quarter, SKB’s AIDC business unit posted revenue of 136.2 billion won, representing a 92.6% jump from the same period a year earlier.

Additionally, SK Telecom reduced company-wide operating costs by 5.2% versus the previous year, thanks to lower marketing and personnel expenses from entering the 5G (fifth-generation mobile communications) maturity phase, as well as decreased depreciation as initial infrastructure investments completed their amortization. One-time gains from business messaging associated with local elections in June also contributed to the performance. The number of wireless communication subscribers at SK Telecom on a standalone basis recovered to previous levels, reaching 33.57 million (up 0.5%).

SK Hyper launches full-fledged entry into AIDC infrastructure business

The recently established subsidiary, SK Hyper, is expected to become a strong future growth engine through its entry into the AIDC infrastructure business. On July 23, SK Telecom officially launched SK Hyper, announcing its commitment to advance in the AIDC infrastructure field. Synergy among affiliates—such as memory competitiveness from SK hynix and construction capabilities from SK ecoplant—is seen as a key strength.

SK Hyper plans to focus on securing land, building power infrastructure, and attracting customers, while the actual construction and operation of AIDCs will be carried out via a special purpose company (SPC). While the specific profit structure has yet to be finalized, the primary revenue streams are expected to be dividend income from SPC shares and fees for data center operation services.

Researcher Shin commented, “The recent establishment of SK Hyper and its preemptive capital injection of 330 billion won suggest the company has conducted a certain degree of preliminary negotiations with potential clients.”

The outlook for this year and next year also remains positive. SK Telecom’s annual revenue for this year is projected at 17.628 trillion won (up 3.1% year-on-year), with operating profit expected to reach 1.893 trillion won (up 76.4%). The operating margin is forecast to rise steadily to 10.7% this year and 12.9% next year.

Researcher Shin added, “We assign a valuation premium based on SK Telecom’s top market share in the domestic mobile telecommunications market, expectations for SK Hyper’s launch, and growth in the AIDC infrastructure business,” noting, “Among large-cap stocks in Korea, it is a company that offers both profit growth and an AIDC momentum.”

This content was produced with the assistance of AI translation services.