[Click eStock] "KT&G, Long-Term Core Growth Business Expectations Remain Valid"

Hyundai Motor Securities analyzed on the 20th that the long-term expectations for KT&G's core growth businesses remain valid.

Heeji Ha, a researcher at Hyundai Motor Securities, stated in a report on the same day, "In the second quarter of this year, consolidated sales are expected to be 1.3586 trillion KRW, and operating profit 255.7 billion KRW, down 4.2% and 21.9% respectively compared to the same period last year," adding, "This is due to the continued burden from increased tobacco raw material prices and a decrease in profits following the completion of real estate development projects."

Researcher Ha forecasted, "Domestic tobacco sales are expected to increase by 1.9%. Although conventional cigarettes decreased by 2-3%, the increase in duty-free cigarette sales, which have relatively higher unit prices, partially offset the decline in demand," and added, "Meanwhile, demand for NGP sticks is expected to have grown by more than 10% compared to the same period last year."

He continued, "Export tobacco is expected to have decreased by 18.6%, but overseas stick sales are likely to maintain high growth," and said, "Expectations for increased long-term profit contribution due to the expanding proportion of stick sales remain valid."

Regarding overseas subsidiaries, growth centered on Indonesia and the CIS region is expected to continue. However, profits are judged to have somewhat decreased due to changes in tax brackets in the Indonesian region. The second half of the year is expected to see profit improvements as the effects of last year's price increases take hold.

He stated, "This year, KT&G's separate real estate development performance is expected to decline, and the reflection of increased tobacco raw material prices since the fourth quarter last year makes profit decreases inevitable," adding, "Currently, tobacco raw material prices remain at a continuously high level, so cost burdens are expected to persist for the time being."

Additionally, he said, "Although domestic health functional food demand decreased due to the economic downturn, overall scale likely increased slightly due to increased overseas sales centered on China and the United States," and forecasted, "However, with concentrated online promotion costs in China, profits are expected to be similar to last year's level."

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