[Click eStock] HiteJinro, Sochu Average Shipment Price Up 7.9%... Operating Profit Also Up

[Asia Economy Reporter Yoonju Hwang] Shinhan Financial Investment maintained a 'Buy' rating and a target price of 44,000 KRW on Hite Jinro on the 21st, expecting an increase in operating profit due to the rise in soju shipment prices.

Researcher Sanghoon Jo of Shinhan Financial Investment stated, "Starting from the 23rd, it has been decided to raise the shipment prices of soju products such as Chamisul Fresh, Chamisul Original, and Jinro by 7.9%," adding, "The increase in soju sales revenue from this price hike is estimated to be about 90 billion KRW annually."

Researcher Jo explained, "The cost burden for raw materials such as ethanol and bottle caps is expected to be up to 40 billion KRW, and considering some increase in selling and administrative expenses, operating profit is expected to increase by about 30 to 40 billion KRW," adding, "This figure increases our existing operating profit estimates by 15 to 20%."

However, Researcher Jo noted that competitors are also likely to follow suit with price increases soon, so there is expected to be little change in Hite Jinro's market share.

He further anticipated that Hite Jinro would benefit the most from the reopening within the industry.

He said, "When deferred demand for outdoor activities and dining out occurs, the leverage effect in the alcoholic beverage industry, which has a high consumption ratio in dining-out channels, can be significant," and evaluated, "Alcohol consumption has already recovered significantly during the three rounds of social distancing relaxations (October 2020, February 2021, and November 2021)."

He added, "In the outskirts of the metropolitan area and non-metropolitan regions, the market shares of Terra and Jinro Is Back are still low," and stated, "By expanding Ddukkeop Sanghoe and utilizing pop-up stores, the focus will be on increasing penetration in non-metropolitan areas to further accelerate the overall market share growth."

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