[Click eStock] Drinking Continues Despite COVID-19... HiteJinro's 2Q Remains Clear

Domestic Soju and Beer Markets Shrink, but HiteJinro Grows
Market Dominance Increases with Terra and Chamisul Leading

[Asia Economy Reporter Minwoo Lee] Despite the atmosphere of refraining from outdoor activities due to the impact of the novel coronavirus infection (COVID-19), HiteJinro achieved strong first-quarter results thanks to increased sales of beer and soju. It is expected to maintain stable performance in the second quarter, when demand for alcoholic beverages surges.

On the 18th, Yuanta Securities maintained a 'Buy' rating on HiteJinro and raised the target price by 10% to 44,000 KRW under this background. In fact, HiteJinro's first-quarter performance was solid. On a consolidated basis, sales reached 533.9 billion KRW, and operating profit was 56.1 billion KRW. Compared to the same period last year, sales increased by 26%, and operating profit turned positive. The operating profit exceeded the market consensus of 32.1 billion KRW by more than 75%. Both beer and soju sales surpassed expectations, highlighting improved profitability.

HiteJinro grew even as the overall beer and soju market size shrank. Beer segment sales rose 29% year-on-year to 180 billion KRW. Operating profit also turned positive at 8.9 billion KRW. Although the domestic beer market volume declined by about 10% (excluding imports), HiteJinro's volume increased by 44.6%. Thanks to the expanded demand for 'Terra,' the beer market share approached 40%.

The soju segment also recorded sales of 319.2 billion KRW, up 27% from the first quarter of last year. Operating profit during the same period increased by 149% to 46.3 billion KRW. While the domestic soju market volume decreased by 2% in the first quarter, HiteJinro's soju volume grew by 23%. Although the new product 'Jinro Is Back' contributed, it is said that Chamisul led the growth. Supported by this, the soju market share rose by 13 percentage points to 66%.

In the peak season of the second quarter, demand for alcoholic beverages, which had been subdued due to COVID-19, is expected to surge. Eunjeong Park, a researcher at Yuanta Securities, said, "Assuming beer and soju demand increase by 13% and 11%, respectively, in the second quarter, operating profit is expected to reach 25 billion KRW, a 136% increase compared to the same period last year." She added, "Marketing expenses decreased by 10 billion KRW in the first quarter compared to the same period last year, but some expenses are likely to be invested in the process of accelerating market share expansion in the second quarter, which will be partially offset by cost ratio improvements due to increased operating rates."

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