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[Alpha Biz=(Chicago) Reporter Paul Lee] NH Investment & Securities maintained its investment opinion 'Hold' for LG Uplus on the 13th and lowered its target price from 11,000 won to 10,000 won.
NH Investment & Securities achieved huge sales growth last year by securing IoT subscribers, but its operating profit ratio and related operating profit was sluggish, such as subscribers focused on external growth rather than profitability and increased facility investment due to additional allocation of 5G frequencies.
"We need to make efforts to improve profitability at a time when the wireless MNO subscriber base is weakening due to the emergence of low-cost plans and the increased influence of MVNO (Al Ddeul Phone)," said Ahn Jae-min and Kim Do-hee, researchers at NH Investment & Securities. "We need to focus on businesses that we can do well such as IDC (Internet Data Center) and solutions."
According to LG Uplus' performance in the fourth quarter of last year, service revenue rose 2.2% year-on-year to 3 trillion won. Operating profit fell 31.8% year-on-year to 195.5 billion won, far below market consensus (248.2 billion won). The number of wireless subscribers increased by 1.27 million to 25.1 million from the previous quarter due to the increase in MVNO and IoT subscribers, but wireless service sales fell 0.4% from the previous quarter to 1.5 trillion won. Wireless ARPU (average sales per subscriber) was 25,195 won, down 13.5% year-on-year and 7.7% from the previous quarter.
Meanwhile, corporate infrastructure sales rose 17.2% year-on-year to 523.9 billion won. This is due to the evenly growing sales of solutions (223.1 billion won) and IDC (87.3 billion won). Marketing costs remained stable at 537.4 billion won.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
