Tags: Asian | investing | SK | SKM

Alternative Asian Investing: SK Telecom

By    |   Thursday, 03 Nov 2011 03:20 PM

On a macroeconomic level, investors have several reasons to consider South Korea’s SK Telecom (SKM). South Korea is the 15th-largest economy globally, yet just nine South Korean stocks trade as ADRs in the United States. Also, SKM has a history of paying a very attractive dividend yield. It all adds up to an interesting alternative to typical Asian investment strategies.

SK Telecom is the largest mobile telecommunications service provider in South Korea. The company has twice the market cap as its nearest competitor, KT Corp (KT). At the close of the first half of 2011, SK Telecom had more than 26 million subscribers in a country of 48 million. The company provides fixed-line telephone, Internet access services, mobile cellular telephone and wireless data services. Cellular services provide the bulk of company revenues.

For the second quarter of 2011, total company revenues were 5.6 percent higher than for the same quarter of 2010. Net income increase by 3.8 percent as net margin dropped to 11.5 percent from 11.7 percent.

The full year earnings estimate from the one Wall Street analyst following SKM is net income of $2.15 per share.

Attractive dividend

SK Telecom makes dividend payments twice a year. The mid-year distribution made at the end of June was for 1,000 won. After ADR and currency conversion, this dividend is usually 9 cents to 10 cents per share. The year-end dividend is based on the net profits for the year and the company distributes approximately 50 percent of net income per share on an annual basis.

For the last two years, the year-end distribution has been about 85 cents per ADR share. A 95 cent annual dividend rate puts the dividend yield at 6 percent.

The most recent analyst report on SK Telecom included a downgrade from the analysts at HSBC Securities. The analysts downgraded their rating to neutral from overweight. For reference purposes, the South Korean won has ranged from 1,050 to just short of 1,200 to the dollar over the last year.

The company next reports on Oct. 27.

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On a macroeconomic level, investors have several reasons to consider South Korea s SK Telecom (SKM). South Korea is the 15th-largest economy globally, yet just nine South Korean stocks trade as ADRs in the United States. Also, SKM has a history of paying a very attractive...
Asian,investing,SK,SKM
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2011-20-03
Thursday, 03 Nov 2011 03:20 PM
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