[Click e Stock] "KT&G, Global Business Expansion Expected... Target Price Up"

On the 17th, IBK Investment & Securities raised the target price for KT&G from 100,000 KRW to 107,000 KRW, forecasting that its global business capabilities will gradually strengthen.

Kim Taehyun, a researcher at IBK Investment & Securities, explained, "Lil has expanded into 31 countries, covering about 80% of the global heated tobacco product market, and by increasing overseas production plants in countries such as Kazakhstan, it will gradually strengthen its global business capabilities. Accordingly, we increased the target price by applying a 20% premium to the price-to-earnings ratio (PER) from 12.4x to 14.8x."

KT&G's third-quarter performance this year is expected to meet lowered expectations. Researcher Kim said, "KT&G's consolidated sales for the third quarter are estimated to be 1.6292 trillion KRW, a 0.3% increase year-on-year, and operating profit is expected to decrease by 13.2% to 351.9 billion KRW. Although the tobacco segment will continue to underperform, it will generally meet market forecasts (sales of 1.6602 trillion KRW and operating profit of 350.7 billion KRW)."

Due to the decline in total domestic heated tobacco demand, domestic heated tobacco sales are expected to decrease by about 3%, but overall heated tobacco sales are anticipated to improve by 5.1% year-on-year, supported by a recovery in exports to the Asia-Pacific and Middle East regions with higher average selling prices (ASP) and strong sales from the Indonesian subsidiary. On the other hand, sales of electronic cigarettes (NGP) are expected to shrink by 34.5% due to a base effect from many newly entered countries in the third quarter of last year, leading to a decrease in device exports. Researcher Kim added, "The burden of rising costs, such as tobacco leaf input, is also understood to have continued."

The stock price recovery trend is expected to continue due to strengthened shareholder return policies and expectations for next year's performance. Researcher Kim said, "Although there may be performance noise until the fourth quarter, the market appears to give higher scores to strengthened shareholder return policies such as the introduction of semi-annual dividends, share buybacks, and cancellations rather than short-term performance. Moreover, as the year-end approaches, the stock price recovery trend will continue, reflecting a dividend yield of around 6% (including semi-annual dividends) and expectations for improved performance next year."

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