KT Corporation’s (KT Corp) 3Q 08 revenues declined, mainly due to a decline in revenues from the Land-to-Mobile (LM) and Telephone segment, partially offset by an increase in revenues from the Internet application and Wireless segments. Furthermore, although EBITDA margin increased, operating margin declined due to an increase in depreciation and amortization expense. In addition, going forward we expect operating margin to decline due to an anticipated increase in overall operating expenses. Hence although the target price supports a BUY at current levels, in light of the above mentioned factors we do not anticipate a change in our current rating. We do not anticipate a change in our HOLD rating for the ADR as we anticipate a significant negative currency impact on the ADR over the next 6-12 months.

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