Increased Beer Sales Amid Late Heat... HiteJinro Continues Strong in Second Half

Expansion of High-Priced Household Can Product Sales Due to COVID-19
Increased Marketing Costs Pose Burden Entering Peak Season

[Asia Economy Reporter Minwoo Lee] Following the first quarter, Hite Jinro posted solid results in the second quarter as well. With the demand for canned beer for home consumption increasing due to the novel coronavirus disease (COVID-19), and coupled with the late summer heat, the growth trend is expected to continue into the second half of the year.

On the 22nd, Cape Investment & Securities maintained a 'Buy' rating on Hite Jinro for these reasons and raised the target price by 9.5% to 46,000 KRW.

Hite Jinro recorded consolidated sales of 581.6 billion KRW and operating profit of 54.1 billion KRW in the second quarter of this year. These figures represent increases of 10.9% and 410.9%, respectively, compared to the same period last year. The strong performance appears to be continuing following the first quarter. This is attributed to an increase in market share centered on new products and sustained home demand due to the ongoing impact of COVID-19, which has reduced cost burdens.

For beer, sales reached 220.3 billion KRW with an operating profit of 12 billion KRW. Sales increased by 11.5% year-on-year, and operating losses turned into profits. The market share was confirmed to have increased to over 40%, maintaining the growth trend. Soju also showed solid performance, with sales of 338.3 billion KRW and operating profit of 38.5 billion KRW, up 13.1% and 43.3%, respectively, from the same period last year.

Growth is expected to continue in the second half, which is experiencing late summer heat. In particular, beer sales are expected to increase for canned products, which have higher selling prices and a large share of home consumption. Soju is also projected to maintain its number one position with a market share in the mid-60% range. However, marketing competition is expected to intensify during the peak season, which is a concern. Although profitability is expected to improve continuously, the rate of increase is anticipated to slow compared to the second quarter.

Kim Hyemi, a researcher at Cape Investment & Securities, stated, "Ahead of the peak season, each company is expected to strengthen promotional events in the home market," adding, "In the case of soju, competition will intensify with the launch of new products by the industry's second-largest company, leading to increased cost burdens in the second half."

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