[Click e-Stock] "KT&G's Tobacco Division Shows Growth... Target Price Maintained"

On October 21, Sangsangin Securities maintained its "Buy" investment rating and target price of 160,000 won for KT&G, stating that "the company's core tobacco business is showing strong performance, particularly in overseas markets."

On this day, Sangsangin Securities researcher Kim Hyemi said, "While the entire company continues to post robust results centered on the tobacco business, both sales and operating profit are expected to grow in the third quarter not only overseas but also in the domestic market."

For the third quarter on a consolidated basis, she forecast sales of 1.7575 trillion won (up 7.4% year-on-year) and operating profit of 452.9 billion won (up 8.4%). By segment, sales in the tobacco division are estimated to grow by 10% year-on-year. Kim explained, "Despite the overall decline in demand in the domestic cigarette market, there was preemptive demand for inventory buildup ahead of the extended holiday period," adding, "Domestic sales volume appears to have increased by about 1% year-on-year."

She continued, "For overseas cigarettes, double-digit growth is expected to continue as the expansion of sales region coverage, product portfolio, and price increases are driving both higher sales volume and prices. Next-generation products (NGP) also saw domestic sales growth due to the holiday effect and the trend of switching to NGP, and overseas, the normalization of device sales and the increasing trend in stick sales are expected to continue."

Sales in the health functional food business are expected to decrease by 7% year-on-year. Kim said, "Although overall sales in this segment are likely to be sluggish due to some deferred domestic sales caused by differences in holiday timing and continued strategic reduction of advertising and promotions in the Greater China region, profitability is expected to improve." Regarding real estate, she stated, "Sales are expected to increase by 37% year-on-year," adding, "Revenue recognition and operating profit are expected to expand as the progress rate of small and medium-sized development projects advances."

It is also positive that the company reaffirmed its commitment to shareholder returns at last month's corporate briefing. Kim added, "With earnings announcements and the year-end dividend season approaching, KT&G's relative attractiveness within the sector is becoming more prominent. The share prices of global major tobacco companies have also risen significantly throughout this year, which is providing support for an upward trend in KT&G's stock both internally and externally."

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