Domestic Mobile Communications Firms UndervaluedAn analysis was put forward that stock prices of SK Telecom and Hansol M.com, formerly Hansol PCS, are underrated, compared to other Asian mobile communication firms.
In a recent report, Daewoo Securities asserted that Korean companies are relatively underestimated when their stock prices are compared with those of major Asian mobile communication firms, excluding those in Japan, based on the total market price per user.
According to the report, as of the end of 1999, the total market price per user for six major companies in five nations - China, Hong Kong, Malaysia, Thailand, and Korea - was calculated at $3,877 (about 4.3 million Korean won) on average.
In the case of Korean companies, the total market price per user, calculated using February 10's stock prices, was merely 3.7 million won for SK Telecom, 3.96 million won for Korea Telecommunications Freetel, and 2.6 million won for Hansol M.com.
Using the standards of the Asian average, Daewoo claims that the appropriate stock prices are 5.2 million won for SK Telecom, 75,000 won for Hansol M.com, and 140,000 won for Korea Telecommunications.
Accordingly, Daewoo Securities pointed out that SK Telecom has room to grow about 1 million won, while Hansol M.com is underrated by about 30,000 won. However, it explained that Korea Telecommunications Freetel stock price has reached the adequate level, for it rose from the 120,000-won level February 10 to the 150,000-won level February 15. In addition, Daewoo asserted that the adequate price for LG Telecom, which is currently limited to trade outside the Korean Stock Exchange, is around 70,000 won.
Min Kyong-se, a research fellow, said, 'We excluded Japan which has a far higher level of stock prices and studied other Asian nations. Yet it has been revealed that Korean companies are underrated. In particular, Hansol M.com is highly likely to form a strategic relationship or merge with another communication business. Therefore, I recommend people to buy its stocks at the current price level.'