[Click eStock] "HiteJinro, Outlook for a Weaker First Half and Stronger Second Half This Year"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 48,000 KRW on Hite Jinro on the 10th, expecting demand recovery from the second half of the year.

This year, liquor companies are expected to see a clear demand recovery as the second half progresses. Although last year’s second half performance was relatively weak compared to the first half, the vaccination rollout starting with medical staff is becoming visible, raising expectations for the easing of 'social distancing.'

Last year, the beer and soju markets shrank by 9% and 4%, respectively, compared to the previous year due to COVID-19. Eunju Shim, a researcher at Hana Financial Investment, explained, “The negative impact in the second half was greater than in the first half due to social distancing,” adding, “Especially, the B2B liquor market was sluggish as normal business activities could not be conducted in the second half.”

This year, assuming annual beer and soju sales increase by 7.7% and 2.7% respectively compared to the previous year, consolidated sales are expected to reach 2.3555 trillion KRW, a 4.5% increase year-on-year. Operating profit is projected to grow 11.5% to 215.8 billion KRW. Researcher Shim said, “There is room for upward revision of earnings estimates depending on the recovery level of the liquor market in the second half,” and added, “Advertising and promotional expenses will slightly increase compared to last year.”

Considering the decline in raw material prices, the impact of cost burden on profit and loss is expected to be limited. Consolidated sales and operating profit for the first quarter are expected to decrease by 5% and 15.8%, respectively, compared to the same period last year, which is estimated to meet market expectations. Researcher Shim stated, “The first quarter results this year are expected to be the bottom, with gradual improvement quarter by quarter,” and added, “If social distancing is eased, expectations for liquor market recovery could be reflected in the stock price.”

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