SK Telecom: A Blue-Chip Defensive Stock That Could Outperform KOSPI Amid Market Turmoil

• Amid recent market turmoil, we believe that SK Telecom could be a solid blue-chip, defensive Korean stock that could outperform the market in the next 6-12 months.

• SK Telecom reported better than expected profits in 2Q 2024. The company's sales were 0.5% higher than the consensus and its operating profit was 3.9% higher than the consensus estimates.

• SK Telecom's shareholder return policy is to return at least 50% of adjusted profit for the year on a consolidated basis.

Conclusion First

The recent market turmoil has involved numerous signs that are pointing to a potential global recession including Warren Buffett unloading nearly half of his holdings in Apple (AAPL US), unwinding of the Yen carry trade, weakness in the global IPO markets, and start of the un-inversion of the US Treasuries (2 year/10 year) spread.

Amid these troubling signs, we believe that SK Telecom could be a solid blue-chip, defensive Korean stock that could outperform the market in the next 6-12 months.It posted better than expected results in 2Q 2024 and it is likely to be a key beneficiary of the Corporate Value Up program in Korea.

SK Telecom's shareholder return policy is to return at least 50% of adjusted profit for the year on a consolidated basis.If we assume DPS of 3,540 won in 2024 (same as in 2023), this would suggest a dividend yield of 6.8% at the current price of 51,800 won.