[Click eStock] "HiteJinro's Q2 Earnings Fall Short of Expectations... Target Price Down"

Hyundai Motor Securities has lowered the target price of Hite Jinro from 30,000 KRW to 27,000 KRW, anticipating that the company's Q2 earnings this year will fall short of market expectations. The investment rating remains at 'Buy.'

On the 18th, Hyundai Motor Securities forecasted that Hite Jinro's consolidated sales for Q2 would increase by 2.1% year-on-year to 661.5 billion KRW, while operating profit is expected to drop by 77.1% to 14.3 billion KRW. Heeji Ha, a researcher at Hyundai Motor Securities, explained, "This is below market consensus, due to concentrated beer marketing expenses and rising raw material costs for soju."

Thanks to strong Kelly sales, beer sales volume is expected to increase by 10% compared to the same period last year. However, with the peak season approaching, beer competition has intensified, leading to marketing expenses for beer being concentrated in Q2 and Q3 more than anticipated. Researcher Ha said, "Following Q1, we expect beer operating profit to turn to a loss in Q2 as well," adding, "A downward revision of the annual earnings forecast is also necessary."

Soju sales volume is expected to decline by about 5%, considering the high base effect from last year's surge in demand due to the Cargo Solidarity strike. Operating performance is also projected to have decreased due to cost increases in alcohol and packaging.

Researcher Ha stated, "Due to expected concentrated marketing expenditures to secure Kelly's market share during the peak Q2 and Q3 seasons, we have revised down the annual earnings estimates and consequently lowered the target price," adding, "Future stock price momentum will be linked more to Kelly's sales volume and market share expansion than to earnings."

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