KT Stock Slides 14% in 3 Months: Is the Pullback a Buying Opportunity?

Core Viewpoint - KT Corporation's shares have declined approximately 13.5% over the past three months, underperforming the Zacks Wireless Non-US Markets growth of 10.6, despite strong underlying fundamentals and a strategic pivot towards Artificial Intelligence and Information and Communications Technology (AICT) [1][10]. Financial Performance - In Q2 2025, KT reported a revenue increase of 13.5% year over year, reaching KRW 7,427.4 billion, while operating profit more than doubled to KRW 1,014.8 billion, driven by robust performance in traditional telecom and AI initiatives [6][10]. - The AI IT business revenues grew by 13.8% year over year, and revenues from KT Cloud increased by 23%, reflecting strong data center momentum and project wins [11]. Strategic Transformation - KT is transitioning from a traditional telecom company to an AICT firm, integrating IT and AI with telecommunications to offer unique services [7]. - The company is developing a comprehensive AI lineup anchored by its proprietary Mi:dm2.0 large language model, with early contract wins from government and public sector entities [8]. - KT has partnered with Microsoft to enhance its AI capabilities, integrating an AI agent into Genie TV and planning to introduce a tailored AI model for Korea in the second half of 2025 [9]. Shareholder Returns - KT has a stable dividend policy and a KRW 1 trillion share buyback plan, with KRW 250 billion already completed, indicating strong confidence in future cash flow [13]. - The dividend for Q2 was raised by 20% year over year to KRW 600 per share, enhancing the appeal of KT shares to investors [13]. Valuation and Market Position - KT's stock is trading at a price/book multiple of 0.72X, significantly lower than the industry average of 2.22X, indicating a potential undervaluation [18]. - Compared to peers, KT's stock performance has lagged, with SK Telecom down 6.1% and América Móvil gaining 23.3% over the same period [20]. Long-term Outlook - Despite recent stock declines, KT's solid financial performance, AICT transformation, and expanding partnerships position it for sustained long-term growth [21]. - The company's disciplined expense management and aggressive share buyback program are additional positives for potential investors [21].