[Click eStock] HiteJinro Expects Beer Division to Return to Profit This Year

[Asia Economy Reporter Park Jihwan] Daishin Securities on the 8th forecasted that Hite Jinro will迎 a second heyday this year due to the beer division turning profitable and continued strong soju sales. Accordingly, they maintained a 'Buy' investment rating and set a target price of 39,000 KRW.

Han Yujeong, a researcher at Daishin Securities, stated, "Hite Jinro's consolidated sales in Q1 increased by 28% year-on-year to 540.6 billion KRW, and operating profit is expected to turn positive at 32.7 billion KRW." Despite the impact of the novel coronavirus (COVID-19) pandemic reducing the size of the on-premise liquor market compared to the same period last year, sales volumes of Terra and Jinro are estimated to have increased by 2% and 29% quarter-on-quarter, respectively.

In particular, the beer division, which had long suffered losses due to increased operating rates from higher sales volumes, is expected to turn profitable this year, and from next year, it is anticipated to contribute significantly to profits through leverage effects.

Researcher Han explained, "Sales of the company's own brand beers, excluding imported beer sales, are expected to increase by 14% year-on-year this year," adding, "Although Terra's quarterly sales sharply declined in the on-premise channel due to the COVID-19 situation, it is expected to enter a gradual recovery phase from Q2, with Q1 being the bottom."

Han also predicted, "Soju sales are expected to increase by 25% compared to the same period last year, and the domestic soju market share, which was 61% last year, is expected to exceed 70% by the end of this year."

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