[Click eStock] KT&G, PMI Partnership Drives Export Growth in Full Swing

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment analyzed on the 1st that while the fundamental improvement of KT&G is viewed positively, the relatively weakened dividend appeal is having a negative impact on supply and demand. The investment opinion 'Buy' and the target price of 103,000 KRW were maintained.

This year, HNB export volume through PM partnership is expected to increase significantly. After completing test sales in Japan at the beginning of the year, 'Lil' expanded its sales channels to convenience stores nationwide. In the recent earnings announcement, the management forecasted that domestic and overseas HNB sales would reverse in 2023. Considering the favorable response in Japan and the future expansion of countries, the timing could be earlier than expected.

This year, consolidated operating profit is forecasted to be 1.5122 trillion KRW, similar to the previous year. Sim Eun-joo, a researcher at Hana Financial Investment, stated, "We view the fundamental improvement positively due to the recovery of cigarette exports to the Middle East and the expansion of HNB coverage to Japan and other countries," adding, "However, the strengthening of ESG (Environmental, Social, and Governance) investment and the relatively weakened dividend appeal compared to the past seem to be negatively affecting supply and demand."

Meanwhile, consolidated sales and operating profit for the first quarter are estimated at 1.2267 trillion KRW (YoY +4.1%) and 340.7 billion KRW (YoY +8.1%), respectively. It is expected to meet market expectations.

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