[Click eStock] "HiteJinro, 3Q Profit Decline Trend Expected to Continue"

NH Investment & Securities maintained its 'Buy' rating and target price of 28,000 KRW for Hite Jinro on the 16th, expecting the profit decline trend to continue in the third quarter of this year.

Joo Young-hoon, a researcher at NH Investment & Securities, said, "The profit decline trend will continue due to rising manufacturing costs and increased marketing expenses. However, we believe that concerns about earnings have been largely reflected in the stock price, and since the current stock price corresponds to a dividend yield of about 4.8%, there is potential for downside support."

NH Investment & Securities forecasts that Hite Jinro's consolidated third-quarter results will show sales of 666.5 billion KRW, a 1% increase year-on-year, and operating profit of 27.4 billion KRW, a 52% decrease, falling short of market expectations (consensus) on an operating profit basis.

Researcher Joo estimated, "Soju segment sales are expected to be 362.1 billion KRW, down 3% year-on-year. Although Hite Jinro, the market leader, maintains a strong market dominance, the domestic soju market growth rate itself has slowed, and due to the impact of increased ethanol prices, profitability challenges still exist. Beer segment sales are expected to increase by 6% to 237.3 billion KRW. While sales trends are favorable, marketing expenses have continued to rise following the launch of the new product Kelly." He added, "However, marketing expenses are expected to gradually decrease after peaking in the third quarter."

Considering that competitors have implemented price increases, there is also an expectation for Hite Jinro to raise prices. Recently, competitor OB Beer raised the shipment prices of major beer products by an average of 6.9%. Researcher Joo said, "It is not possible to definitively say whether Hite Jinro will raise prices at this point, but given the significant burden of rising manufacturing costs, the possibility remains open. If price increases occur, it would be positive for both earnings and stock price."

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