KT Corp.: Multiple Positives (Rating Upgrade)

Group 1: Positive Developments for KT Corporation - KT Corporation has a positive capital return outlook, with plans to cancel a substantial amount of treasury shares, which is encouraging given that 81% of listed companies in Korea hold treasury stocks [3][10] - The company's consensus next twelve months' dividend yield is 5.6%, and the actual forward shareholder yield could improve with further share buybacks [3] - A new partnership with Microsoft is expected to enhance KT's capabilities in AI and cloud research, potentially involving multi-billion dollar investments [12] Group 2: Competitive Dynamics - The competitive landscape for the South Korean telecommunications industry has improved, as fears of a new entrant, Stage X, have eased following the revocation of its license due to financial issues [11] - KT Corporation's telecommunications business is now better positioned to maintain its market share and earnings without the threat of increased competition from new players [11] Group 3: Financial Metrics - KT Corporation is currently trading at a normalized EV/EBITDA multiple of 3.1 times, which is considered undemanding, suggesting potential for valuation expansion [7] - The company's cloud business, KT Cloud, reported a revenue growth of 17.8% year-over-year in Q1 2024, significantly outpacing the overall top line growth of 3.3% [12]