Tera Leads, Izbaek Pushes... HiteJinro Smooth Sailing

Impact of Beer and Soju Market Share Expansion
Whether Market Share Sustains Will Determine Stock Price Direction

[Asia Economy Reporter Koo Eun-mo] HiteJinro's stock price continues to rise day by day. Although the liquor market has been sluggish due to the adverse effects of the novel coronavirus infection (COVID-19), HiteJinro, led by 'Terra' and 'Jinro Is Back,' is expected to show favorable performance. Whether the company can continue to expand its market share will likely serve as the key driver for the stock price direction.

According to the Korea Exchange on the 6th, on the 4th, HiteJinro's stock price closed at 33,000 KRW, up 1.69% (550 KRW) from the previous trading day, and HiteJinro Holdings also rose 2.95%. Notably, HiteJinro's stock price reached 34,150 KRW intraday, setting a new 52-week high. Since the KOSPI hit its low on March 19, HiteJinro's stock price has risen 50.0%, significantly outperforming the KOSPI's 30.0% increase during the same period.

Despite concerns over COVID-19, the expanding market shares of beer and soju since last year appear to be influencing the stock price. According to DB Financial Investment, HiteJinro's beer market share, excluding imported beers, is estimated to be close to 40%, and its soju market share has reached the mid-60% range, supported by the weakness of regional soju companies and the strong performance of Jinro Is Back.

Terra, a beer launched last year, has been performing well, selling 2.8 million cases in January and maintaining monthly sales of over 2 million cases even during the COVID-19 period. Jinro Is Back also sold 1.3 million cases in January and continued to sell over 1 million cases monthly in February and March.

Experts emphasize that the expansion of market share is a key factor for earnings growth in liquor companies and should be carefully considered in future investment decisions. Kim Jung-wook, a researcher at Meritz Securities, stated, "Japanese Asahi beer regained its number one market share by focusing all marketing efforts on 'Super Dry' after its launch. Similarly, Terra has consistently built its brand image since its launch and is confirmed to be growing beyond a new product effect into a leading brand, which is positive."

DB Financial Investment researcher Cha Jae-heon also said the current moment is "the time to focus on strengthening market dominance," adding, "Although the pace of profit improvement seems slow due to active marketing expenditures, given the current sales trends of beer and soju, strong operating leverage expansion is expected over the next three years." Cha projected that Terra's sales, which were 16 million cases last year, will grow to 30 million cases this year and 38.36 million cases next year.

According to financial information provider FnGuide, HiteJinro's first-quarter sales this year are estimated at 508.7 billion KRW, a 20.3% increase compared to the same period last year. Operating profit for the same period is expected to turn positive, recording 31.6 billion KRW. For the entire year, sales are projected at 2.2411 trillion KRW and operating profit at 161.1 billion KRW, representing increases of 10.1% and 2.7%, respectively, compared to last year.

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