Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<div class="content-highlight">
SK Telecom reported solid results in 3Q 2020. The company generated revenue of 4.7 trillion won (up 3.7% YoY and 0.8% higher than consensus), operating profit of 361.5 billion won (up 19.7% YoY and same as consensus), and net profit of 395.7 billion won (up 44.4% YoY and 5.6% lower than the consensus). We remain positive on SK Telecom.
SK Telecom paid dividends per share of 10,000 won this year. At the current price of 223,000 won, this represents a dividend yield of 4.5%. There has been some ongoing discussions about linking the dividends of its major affiliates including SK Hynix (20.7% owned by SK Telecom). However, it appears that this is not likely to occur as the new requirement for new holding companies' ownership of subsidiaries is expected to increase from 20% to 30%.
</div>We like SK Telecom's shares right now and believe they are undervalued. We think there are three key catalysts on this stock over the next one year which are as follows:1) Solid expansion of 5G Services - At the end of September, the company had 4.3 million 5G subscribers and this number is likely to nearly double by the end of 2021.2) IPO of key subsidiaries - SK Telecom plans to first complete the IPO of its subsidiary OneStore in 2H 2021 and other key promising subsidiaries including 11st, SK Broadband, Wavve, and SK Broadband over the next 2-3 years.3) Completion of divorce between Chairman Chey and his wife - The divorce proceedings between Chairman Chey and his wife has been ongoing for more than 10 months. Chey's wife Roh is seeking a 42% stake in SK Holdings. A completion of this divorce proceedings could be a key catalyst that accelerates the reorganization of the entire SK Group, including SK Telecom and SK Holdings.


SK Telecom reported solid results in 3Q 2020. The company generated revenue of 4.7 trillion won (up 3.7% YoY and 0.8% higher than consensus), operating profit of 361.5 billion won (up 19.7% YoY and same as consensus), and net profit of 395.7 billion won (up 44.4% YoY and 5.6% lower than the consensus). We remain positive on SK Telecom.
SK Telecom paid dividends per share of 10,000 won this year. At the current price of 223,000 won, this represents a dividend yield of 4.5%. There has been some ongoing discussions about linking the dividends of its major affiliates including SK Hynix (20.7% owned by SK Telecom). However, it appears that this is not likely to occur as the new requirement for new holding companies' ownership of subsidiaries is expected to increase from 20% to 30%.
We like SK Telecom's shares right now and believe they are undervalued. We think there are three key catalysts on this stock over the next one year which are as follows:1) Solid expansion of 5G Services - At the end of September, the company had 4.3 million 5G subscribers and this number is likely to nearly double by the end of 2021.2) IPO of key subsidiaries - SK Telecom plans to first complete the IPO of its subsidiary OneStore in 2H 2021 and other key promising subsidiaries including 11st, SK Broadband, Wavve, and SK Broadband over the next 2-3 years.3) Completion of divorce between Chairman Chey and his wife - The divorce proceedings between Chairman Chey and his wife has been ongoing for more than 10 months. Chey's wife Roh is seeking a 42% stake in SK Holdings. A completion of this divorce proceedings could be a key catalyst that accelerates the reorganization of the entire SK Group, including SK Telecom and SK Holdings. 

Major Highlights of SK Telecom's 3Q 2020 Earnings Conference Call

Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

The Wall Street Journal today published a leak that Intel and SK hynix are in negotiations for SK hynix to acquire Intel's memory business.  This Smartkarma Insight analyzes such a sale to determine its feasibility.

The Wall Street Journal today published a leak that Intel and SK hynix are in negotiations for SK hynix to acquire Intel's memory business.  This Smartkarma Insight analyzes such a sale to determine its feasibility.

Intel's Memory Business Sale.  Does It Make Sense?

Event-Driven

It was announced this morning that <a href="https://www.smartkarma.com/entities/sk-telecom-co-ltd-bbccd86c-474d-4a4d-946d-10e911a225a2" target="_blank" data-smartkarma-citation="entities:395:1" rel="noopener">SK Telecom (017670 KS)</a> plans to spin-off its mobility business and potentially partner with <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber (UBER US)</a> to launch a multi-service mobility platform. Following this news, shares of SK Telecom declined 4.7% to 231,000 won. This move follows the recent funding received by Socar last month which put Socar as the next Unicorn in South Korea. For further details, see our recent insight <a href="https://www.smartkarma.com/insights/socar-the-biggest-car-sharing-platform-in-korea-becomes-the-next-unicorn" target="_blank" data-smartkarma-citation="insights:44064" rel="noopener">Socar: The Biggest Car-Sharing Platform in Korea Becomes the Next Unicorn</a>.

It was announced this morning that SK Telecom (017670 KS) plans to spin-off its mobility business and potentially partner with Uber (UBER US) to launch a multi-service mobility platform. Following this news, shares of SK Telecom declined 4.7% to 231,000 won. This move follows the recent funding received by Socar last month which put Socar as the next Unicorn in South Korea. For further details, see our recent insight Socar: The Biggest Car-Sharing Platform in Korea Becomes the Next Unicorn. 

SK Telecom Plans to Spin Off Mobility Business & Partner with Uber

Private Capital Markets

<a href="http://www.koreaninvestors.com/?p=12720" target="_blank" rel="noopener">Socar Inc</a> became another South Korean unicorn last month, valuing the company around 1.1 trillion won after received new funding worth 50 billion won from SG Private Equity in September. This follows an investment of 50 billion won from SoftBank Ventures and LB Private Equity in early 2020. Established in 2011, Socar is now the biggest mobility, car-sharing platform in Korea.

Socar Inc became another South Korean unicorn last month, valuing the company around 1.1 trillion won after received new funding worth 50 billion won from SG Private Equity in September. This follows an investment of 50 billion won from SoftBank Ventures and LB Private Equity in early 2020. Established in 2011, Socar is now the biggest mobility, car-sharing platform in Korea.

Socar: The Biggest Car-Sharing Platform in Korea Becomes the Next Unicorn

<div class="content-highlight">
OneStore, the third-largest app market operator in Korea, is owned by SK Telecom. OneStore is expected to complete its IPO in <a href="https://en.yna.co.kr/view/AEN20200929009400320" target="_blank" rel="noopener">2021.</a> The local media have mentioned the value of OneStore to be between 1 trillion won to <a href="http://www.businesspost.co.kr/BP?command=article_view&amp;num=196943" target="_blank" rel="noopener">2 trillion won. </a>
OneStore's market share increased sharply from 12.9% in June to 14.1% in July and 18.4% in August. The key reason for this sharp increase in OneStore's market share is due to Google Playstore's recent decision to enforce a 30% fee for all in-app digital content purchases. The sharp increase in market share has been one of the main reasons why the market valuation estimates of OneStore have recently increased from about 1 trillion ton to nearly 2 trillion won. 
</div>


OneStore, the third-largest app market operator in Korea, is owned by SK Telecom. OneStore is expected to complete its IPO in 2021. The local media have mentioned the value of OneStore to be between 1 trillion won to 2 trillion won. 
OneStore's market share increased sharply from 12.9% in June to 14.1% in July and 18.4% in August. The key reason for this sharp increase in OneStore's market share is due to Google Playstore's recent decision to enforce a 30% fee for all in-app digital content purchases. The sharp increase in market share has been one of the main reasons why the market valuation estimates of OneStore have recently increased from about 1 trillion ton to nearly 2 trillion won. 


South Korea

SK Telecom Co., Ltd. is a Korean mobile and telecommunications operator. The Company provides cellular voice, wireless data, and wireless internet services. SK Telecom also offers fixed line services and platform services.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

SK Telecom (017670 KS)

Major Highlights of SK Telecom's 3Q 2020 Earnings Conference Call

In this insight, we provide the major highlights of SK Telecom's 3Q 2020 earnings results. The company reported solid results in 3Q 2020, and its...

Douglas Kim

Intel's Memory Business Sale. Does It Make Sense?

The Wall Street journal today published a leak that Intel and SK hynix are in

Jim Handy

SK Telecom Plans to Spin Off Mobility Business & Partner with Uber

It was announced this morning that SK Telecom (017670 KS) plans to spin-off its mobility business and potentially partner with Uber (UBER US) to...

Douglas Kim

Initial Thoughts on the OneStore IPO

OneStore's market share increased sharply from 12.9% in June to 18.4% in August, mainly due to Google Playstore's recent decision to enforce a 30%...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Major Highlights of SK Telecom's 3Q 2020 Earnings Conference Call

In this insight, we provide the major highlights of SK Telecom's 3Q 2020 earnings results. The company reported solid results in 3Q 2020, and its...

Douglas Kim

Intel's Memory Business Sale. Does It Make Sense?

The Wall Street journal today published a leak that Intel and SK hynix are in

Jim Handy

SK Telecom Plans to Spin Off Mobility Business & Partner with Uber

It was announced this morning that SK Telecom (017670 KS) plans to spin-off its mobility business and potentially partner with Uber (UBER US) to...

Douglas Kim

Socar: The Biggest Car-Sharing Platform in Korea Becomes the Next Unicorn

Socar Inc became another South Korean unicorn last month, valuing the company around 1.1 trillion won after received new funding worth 50 billion...

Douglas Kim

Initial Thoughts on the OneStore IPO

OneStore's market share increased sharply from 12.9% in June to 18.4% in August, mainly due to Google Playstore's recent decision to enforce a 30%...

Douglas Kim