Fair Value on SK Telecom

SK Telecom Co., Ltd. (SKM - Analyst Report) is trading at a forward multiple of 9.2x our fiscal year 2008 EPADR estimate, which is at a discount to its peers in the industry. While growth prospects may be limited in South Korea, SK Telecom is pursuing business opportunities in Vietnam and other emerging markets, including a partnership with China Unicom (CHU - Analyst Report).

The company also instituted a share buyback to bolster shareholder return in addition to its attractive dividend yield. Downside is limited, in our view, and we provide a Hold rating until we have more visibility regarding international growth and improved earnings in 2008. We also await signs of momentum in relation to SK Telecom's business prospects with partners Earthlink (ELNK - Snapshot Report) in the United States and China Unicom in Asia.

We believe the current valuation adequately reflects the company's progress and provides limited appreciation opportunity over the next six months. We reiterate our Hold recommendation with a six-month target price of $25 based on 10x our fiscal year 2008 EPADR estimate more in line with the peer group.

Read the full analyst report on SKM

Read the full analyst report on CHU