[Click eStock] "KT&G, Recent Stock Price Decline... Mid-Term Perspective Buying Opportunity"

[Asia Economy Reporter Park Jihwan] Kiwoom Securities maintained a 'Buy' rating on KT&G on the 23rd, stating that the recent stock price adjustment presents a buying opportunity from a mid-term perspective. However, the target price was lowered by 14.4% from the previous 125,000 KRW to 107,000 KRW.

Park Sangjun, a researcher at Kiwoom Securities, said, "KT&G's consolidated operating profit for Q1 is expected to be 356 billion KRW," adding, "Despite the rise in the KRW/USD exchange rate and increased real estate sales profits, the operating profit is unlikely to increase significantly due to sluggish Middle East cigarette exports and weak sales in duty-free and department store channels."

Park viewed KT&G's foreign currency net assets positively. He stated, "KT&G holds foreign currency net assets, so there is a high possibility of foreign exchange-related valuation gains due to the recent rise in the KRW/USD exchange rate," and "the consolidated net income attributable to controlling shareholders for Q1 is expected to be better than the improvement in operating profit."

Park explained, "With the recent increase in stock market volatility, KT&G's stock price has fallen by more than 20% over the past month," and "the expected dividend yield for this year has risen to 6.5%."

He emphasized, "Although it is true that sales in duty-free and department store channels have been sluggish due to the impact of COVID-19, the possibility of a decline in dividends per share is low," adding, "The effect of increased real estate sales profits and the recent contract renewal with Alokozay are expected to resume Middle East cigarette exports starting this year, and profitability is likely to improve due to the rise in the KRW/USD exchange rate."

Regarding recent concerns related to the Financial Supervisory Service's audit, considering the scale of issues to be discussed about accounting standards appropriateness, stable financial structure, and sustainability of major businesses, it was judged that the possibility of delisting is very low.

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