[Click eStock] "Q3 Liquor Market Recovery... HiteJinro, Repurchase Opportunity"

[Asia Economy Reporter Ji Yeon-jin] Shin Young Securities announced on the 15th that it expects the alcoholic beverage market to recover around the third quarter due to the expansion of COVID-19 vaccination and maintains a buy rating on HiteJinro, keeping the target price at 48,000 won.

HiteJinro's consolidated sales in the first quarter of this year are expected to increase by 0.2% year-on-year, while operating profit is forecasted to decrease by 21.8%, due to the impact of social distancing measures continuing since the end of last year. The third wave of COVID-19 at the end of last year led to sluggish dining-out demand, preventing the company from benefiting from the peak season effects at year-end and New Year. While the home drinking culture has taken hold due to staying at home, resulting in a strong household market, the entertainment market remained weak, causing an overall slowdown in alcoholic beverage sales volume.

However, a gradual improvement in performance is expected starting from the first quarter of this year. The dining-out channel has shown a stepwise recovery since December last year due to slightly eased operating restrictions from February, and with the expansion of vaccine distribution, the alcoholic beverage market is expected to recover around the third quarter.

Researcher Kim Jung-seop of Shin Young Securities said, "We estimate that HiteJinro's consolidated sales and operating profit will increase by 5.4% and 6.9%, respectively, compared to the same period last year." He added, "Although there is a burden on performance base due to intensified promotional activities amid fierce competition in the alcoholic beverage market this year and the sharp market share increase last year, if the market recovers in the second half of this year, it is expected to lead to another performance increase through solid market dominance."

Considering the nature of the alcoholic beverage market, where once established market shares are difficult to change in the short term, and the expectation that as COVID-19 eases, suppressed demand will lead to explosive alcoholic beverage consumption again, these factors also played a role. The current valuation burden caused by the stock price decline has also eased, making it a suitable time for repurchasing.

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