[Special Stock] KT&G, Demand for Electronic Cigarettes Increases

[Asia Economy Reporter Junho Hwang] Daishin Securities raised the target price of KT&G to 110,000 KRW on the 2nd. The main reasons for the upward revision were cited as the increase in demand for electronic cigarettes and the growth of the global market.

Daishin Securities expects KT&G's consolidated sales in the first quarter of this year to be 1.3024 trillion KRW, a 3% increase compared to the previous year, and operating profit to increase by 5% to 334.2 billion KRW. This figure surpasses Daishin Securities' estimated operating profit of 314.5 billion KRW and the market expectation of 311.3 billion KRW.

Although demand in the domestic conventional cigarette market is expected to decrease by 1% compared to the same period last year, the penetration rate of electronic cigarettes is expected to increase by 2 percentage points. However, the total market demand combining conventional and electronic cigarettes is anticipated to show an increasing trend.

Researcher Yujeong Han of Daishin Securities stated, "KT&G's domestic conventional cigarette market share in the first quarter of this year is expected to improve to 64.7% compared to the same period last year, and the sales volume of electronic cigarette sticks is estimated to have recorded a quarterly high."

Philip Morris International (PMI), focusing on expanding the global electronic cigarette market with a diversified portfolio, is expected to see a 14.3% increase in the sales proportion of electronic cigarette sticks (HTU) in the first quarter of this year. Furthermore, the sales proportion of electronic cigarettes (RRP) is expected to expand to 30.5%, leading the performance growth.

Researcher Han explained, "Despite the suspension of exports to the United States, export sales of conventional cigarettes, mainly to the Middle East and Asia-Pacific regions, are estimated to have increased by 12% compared to the same period last year," adding, "In the case of Korea Ginseng Corporation, overall sales are expected to have slightly declined compared to the same period last year due to sluggish domestic sales."

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