"LG Uplus Expands Share Buybacks and Dividends ... A Rising Star in Shareholder Returns" [Click e-Stock]

Daishin Securities Expects a 5.9% Shareholder Return Yield

On September 2, Daishin Securities maintained its target price for LG Uplus at KRW 20,000 and a "Buy" investment rating, assessing that the scale of shareholder returns is increasing due to the company's expanded share buyback and retirement, as well as dividend growth. This analysis suggests an upside potential of 31.4% compared to the previous day's closing price of KRW 15,220. The expansion of the artificial intelligence (AI) data center business is also cited as a medium- to long-term growth driver.

LG U+ Pyeongchon 2 Center Bird's-Eye View

LG Uplus has been conducting a share buyback program worth KRW 90 billion since last month. Kim Hoejae, a researcher at Daishin Securities, stated, "According to the shareholder return policy, which utilizes more than 40% of standalone net income for dividends and share buybacks (0–20%), this year's dividend per share (DPS) is expected to rise by KRW 40 to KRW 700 compared to last year, with total dividends reaching KRW 29 billion and a dividend yield of 4.6%."

The size of the share buyback and retirement will also increase from KRW 80 billion last year (retired on May 15 this year) to KRW 90 billion this year, a 13% increase. The buyback period runs from last month through February next year, and, as of the previous day, KRW 2.38 billion has been acquired, which is 26% of the target.

Reflecting these actions, the total shareholder return for this year is expected to reach KRW 380 billion, up from KRW 360 billion last year, and the total shareholder return yield is projected at 5.9%. The company's corporate value enhancement plan targets a shareholder return ratio of 40-60%, and this year it is expected to reach around 52%.

Researcher Kim noted that, depending on implementation within next year's target shareholder return range (40-60%), the total shareholder return could increase to KRW 420–470 billion with a yield of 6.5–7.2%. However, considering increased investment in data centers, the shareholder return ratio is expected to remain around 52%.

Earnings growth is also a supporting factor for the target price. Daishin Securities estimates that LG Uplus's operating profit for this year will reach KRW 1.2 trillion, up 34% from last year. In particular, the artificial intelligence data center (AICD) business is considered a new growth driver.

The company plans to increase its data center operating capacity from the current 165 megawatts (MW) to 400 MW by 2030, with 130 MW of the additional 235 MW coming from self-operated AICDs. The AICD Buildings 1 to 4 being constructed in Paju will each have a capacity of approximately 32 MW.

Last year, data center sales reached KRW 420 billion, up 18% year-on-year, and if high value-added services such as GPU colocation expand, sales are expected to reach KRW 1.3 trillion by 2030.

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