HiteJinro Expands Market Share Despite COVID-19 Challenges

[Asia Economy Reporter Park Ji-hwan] Heungkuk Securities on the 15th issued a 'Buy' investment opinion and a target price of 39,000 KRW for HiteJinro, stating that it is increasing its market share despite the downturn in the dining-out economy.

Jang Ji-hye, a researcher at Heungkuk Securities, explained, "HiteJinro is increasing its market share as both beer and soju volumes are growing," adding, "Although profitability is expected to decline due to intensified promotions compared to previous estimates, leverage effects are still anticipated."

HiteJinro's consolidated sales for the first quarter of this year are expected to reach 522.2 billion KRW, up 23.5% year-on-year, with operating profit at 22.9 billion KRW, in line with the consensus of 21.8 billion KRW. Beer sales volumes in January and February grew by 95% and 30% respectively compared to the previous year, showing a sharp growth trend despite the low base before the launch of Terra and the downturn in the dining-out economy caused by COVID-19.

Soju volumes grew by 35% and 20% in January and February respectively, and it is analyzed that the price increase effect will lead to an additional sales growth of over 5% until the first half of this year. Operating profit is expected to turn positive due to a reduction in losses in beer and improved profitability in soju.

Researcher Jang emphasized, "Following last year, the operating leverage effect due to market share increases in both beer and soju sectors is expected this year as well," adding, "Beer’s Terra is expected to expand its market share from the Seoul metropolitan area to provincial regions, and soju sales growth is anticipated with the price increase effect in the first half and the sales growth of Jinro Is Back products."

He explained, "The share of Jinro in soju sales has risen to nearly 20%, making a substantial contribution to soju performance growth," but added, "However, from a profitability perspective, due to the dining-out economy downturn caused by COVID-19, beer promotion competition, and increased costs, the operating profit forecast has been revised downward by 10% compared to the previous estimate."

This content was produced with the assistance of AI translation services.