[Click eStock] "KT&G Q3 Strong Performance... Target Price Raised"

On the 10th, Samsung Securities raised the target price for KT&G to 90,000 won, stating that "the company's third-quarter earnings this year exceeded market expectations." The investment rating was maintained at neutral.

On the same day, Jiho Choi, a researcher at Samsung Securities, said, "KT&G's third-quarter sales amounted to 1.69 trillion won, a 4% increase compared to the same period last year. Operating profit was 406.7 billion won, surpassing market expectations by 13%."

The performance varied by business segment. The cigarette and real estate sectors led the strong results. Although the domestic market for combustible cigarettes shrank by 4% compared to the same period last year, KT&G offset this through market share expansion and recovery in duty-free sales. Overseas, the company achieved volume growth despite price increases, showing solid performance. Real estate sales grew by 40% compared to the same period last year. This appears to be the result of a significant reflection of the one-time project performance of the non-residential real estate developer D&C Deok in the third quarter.

However, the core growth businesses fell short of expectations. Domestic sales of NGP (Next Generation Products) increased by 12.5% compared to last year, but overseas sales dropped by 47%. Domestically, intensified market competition led to failure in defending market share. The health and functional food business also underperformed, with sales falling 13% compared to last year. Although duty-free and local sales in China recovered, it was insufficient to offset weak domestic demand.

Researcher Choi analyzed, "By revising the real estate performance estimates, the target price was slightly adjusted upward. For the tobacco business, raw material cost pressures, and for the health and functional food business, weak domestic demand are burdens on next year's performance." He added, "Attention should be paid to the mid- to long-term shareholder return policy announcement. If there is a significant change in future dividend policies, it is judged that valuation adjustments may also be possible."

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