[Click eStock] "KT&G, Expecting Performance Normalization in the Second Half"

[Asia Economy Reporter Park Jihwan] Kiwoom Securities analyzed on the 14th that despite some impact from the COVID-19 pandemic in the second half of the year, KT&G is expected to maintain relatively solid performance as cigarette exports to the Middle East resume.

It is evaluated that a high dividend yield can be realized based on stable performance. Accordingly, the investment opinion 'Buy' and the target price of 107,000 KRW were maintained.

Researcher Park Sangjun of Kiwoom Securities said, "KT&G's Q1 consolidated operating profit was 315 billion KRW, falling short of market consensus," explaining, "Due to the impact of COVID-19, sales of Insamgongsa decreased, and the increase in cigarette excise tax in Indonesia was not temporarily reflected in price hikes, worsening profitability."

The sharp decline in duty-free sales of cigarettes and red ginseng due to COVID-19 is expected to continue into Q2. However, there is an expectation of performance improvement momentum from the second half of the year. It is analyzed that annual performance at the level of previous years is possible due to the rise in overseas cigarette exports and department store sales of red ginseng.

Researcher Park stated, "From Q2 onward, cigarette exports to the Middle East will fully resume, and red ginseng sales in department store channels can recover," adding, "Stable performance improvement is expected on an annual basis."

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