I’m looking at KT Corp as a possible investment for my Korean portfolio and ran into a reporting/modeling question.
KT is listed on the KRX and also trades on the NYSE as an ADR. My understanding is that the ADR represents the same underlying economic interest as the KRX-listed ordinary shares, so the two should generally move together after adjusting for FX and the ADR ratio.
While going through KT’s filings, I noticed that the operating revenue figures appear different depending on the source. In the SEC 6-K filings, revenue seems to be reported on a consolidated basis, including KT’s subsidiaries and non-telecom businesses. In the Korean DART quarterly report, the revenue figure I was looking at appears to focus more on the telecom/parent-company business rather than the full consolidated group.
For anyone who has modeled Korean companies or ADRs before: when building a valuation model for KT, should I primarily use the consolidated figures from the SEC 6-K, or the figures from the DART quarterly reports?
My instinct is that because shareholders own the whole consolidated company, the model should probably be based on consolidated financials, while using the DART filing for segment details, parent-company information, and reconciliation. However, since I am going to invest it in the South Korean market maybe I should use the numbers reported on DART? I’m not fully sure if I’m interpreting the filings correctly.
How would you approach this? Would you model KT using the SEC 6-K consolidated revenue, the DART quarterly report figures, or build a reconciliation between both?