[Click e Stocks] HiteJinro's 'Q1' Swallowing Was Smooth

[Asia Economy Reporter Hwang Junho] Daishin Securities maintained its target price at 49,000 KRW on the 5th, expressing optimism about the price increase effect of HiteJinro and the growth in beer sales.

Daishin Securities anticipated a decrease in shipments this month due to the surge in demand caused by the recent price increase of domestic beer at the end of last month. However, they expected double-digit growth in domestic beer sales revenue for May and June, considering the profit increase from the price hike and the expanded contraction in the beer market in the second quarter compared to the first quarter of last year.

They also forecasted that the first-quarter earnings would exceed expectations. Daishin Securities estimated HiteJinro's operating profit for the first quarter of this year to be 57 billion KRW, surpassing their previous estimate of 54.2 billion KRW and the consensus of 54 billion KRW.

During the same period, sales of imported beer were expected to decline by 15% due to reduced market demand, while domestic beer sales were projected to grow by 11%, resulting in an overall 8% increase in total beer sales revenue. In the soju segment, export sales of other distilled liquors, which had surged by 215% in the first quarter of last year, were expected to decrease by about 16% compared to last year due to a high base effect. However, total domestic soju sales revenue was anticipated to increase by 9%, leading to a 7% rise in overall soju sales revenue.

Researcher Han Yujeong of Daishin Securities stated, "The operating rate of beer factories is estimated at 74%, and that of soju factories at 87%, which is expected to improve the gross profit margin by 0.6 percentage points compared to the previous year." She added, "Despite the 3.1 billion KRW reversal of bad debt provisions in the first quarter of last year, marketing expenses as a proportion of sales are estimated to have been maintained at last year's level, so the operating profit margin is expected to increase by about 0.1 percentage points year-on-year."

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