[Click eStock] "Hite Jinro: Overseas Growth Is the Key Amid Economic Downturn"

Domestic Sales Growth Stagnates Despite Beer Price Hike
Low Overseas Sales Ratio... Vietnam Plant Operation Essential

Hite Jinro is expected to see only modest sales growth this year due to the delayed recovery of the dining-out market. Analysts note that the company will need to rely on steadily increasing overseas soju exports.

On the 29th, Korea Investment & Securities maintained its 'Buy' investment rating and target price of 29,000 won for Hite Jinro, citing these factors. The previous day's closing price was 19,530 won.

For the second quarter of this year, Hite Jinro is projected to post sales of 684.2 billion won and operating profit of 68.4 billion won, representing increases of 2.9% and 0.2%, respectively, compared to the same period last year. The company expects the pace of operating profit growth to slow as profitability in the bottled water division declines due to intensified competition in the tonic water market. However, it believes that profit growth is still achievable through cost reductions.

In detail, for beer, the company anticipates a slight rebound, citing increased demand ahead of a price hike at the end of this month and considering last year's low beer shipments due to quality issues in the same period. For soju, Hite Jinro is expected to defend against a decline in shipments by maintaining a high market share, despite the overall market's delayed recovery.

Overall, the domestic business is expected to see annual operating profit growth again this year through cost reductions. However, even with the beer price increase, sales growth is likely to remain limited. This is because the recovery of the dining-out market continues to be delayed.

The positive factor is the performance of overseas soju exports. In the first quarter of this year, exports reached 28 billion won, up 61.1% from the same period last year. Annual growth is estimated at 10.1% in 2024 and 13.8% (forecast) this year. However, Hite Jinro's overseas sales ratio was only 10.3% last year, which is relatively low compared to other domestic food and beverage companies. The company is expected to increase overseas sales by operating its plant in Vietnam in the future.

Kang Eunji, a researcher at Korea Investment & Securities, said, "While the sluggish domestic market is disappointing, Hite Jinro maintains an overwhelming competitive position in the soju market, and export performance is growing rapidly, which is positive." She added, "If the Vietnam plant begins full-scale operations, the proportion of overseas sales will increase, making a stock price rebound possible."

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