[Click eStock] "KT&G, Global Conventional Cigarette Expansion... Target Price Raised"

On August 8, iM Securities maintained its "Buy" investment rating on KT&G, stating that "profits have improved, driven primarily by the global expansion of conventional cigarettes." The company also raised its target price from 160,000 won to 175,000 won.

Lee Kyungshin, a researcher at iM Securities, commented on the same day, "Amid continued high growth in the global tobacco segment, KT&G has delivered quarterly results that consistently exceed expectations. This demonstrates that the improvement in KT&G's operating strength is not a temporary phenomenon."

He further emphasized, "Considering the interim dividend increase reflecting first-half improvements, the implementation of additional shareholder returns through share buybacks and cancellations, and the monetization of non-core assets, KT&G is expected to continue serving as an excellent investment option that offsets uncertain external variables."

For the second quarter, KT&G reported consolidated sales of 1.5478 trillion won and operating profit of 349.8 billion won. Compared to the same period last year, these figures increased by 8.7% and 8.6%, respectively. Profit improvements across all business segments led to operating results that exceeded market expectations.

Regarding the domestic conventional cigarette market, Lee stated, "Despite market contraction, both conventional cigarettes and NGPs (next-generation products) demonstrated solid market dominance." He added, "Although total market demand for conventional cigarettes declined by 4.8% year-on-year, KT&G's market share improved to 67.6% in the first half, which is a meaningful trend."

On overseas operations, he said, "Despite a high base effect from the same period last year, both export and overseas subsidiary cigarette volumes and direct and indirect price increases contributed to additional operating profit growth." He added, "The overseas cigarette sales growth rate was 30.6% year-on-year, and we are highly confident that the trend of expanding operating results will continue in the second half."

Lee also noted, "While the assumption of a rapid domestic recovery is somewhat burdensome, the inclusion of consumption support funds in July and the potential increase in demand from Chinese tourists could drive further growth in offline operating results, leaving room for additional improvement."

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