KT&G Surges on Strong Earnings and Dividends... Global Investors Show Growing Interest

Global Investors Acquire Over 5% Stakes

New Shareholder Return Policies Planned, Including Enhanced Dividends in the Second Half

KT&G is attracting a surge of foreign investors as it expands dividends on the back of solid earnings.

According to the Financial Supervisory Service's electronic disclosure system on May 15, BlackRock, the world's largest asset manager, and Capital Group, one of the top five asset managers by assets under management, have recently acquired additional shares in KT&G. BlackRock currently holds a 5.01% stake, while Capital Group increased its stake to 5.61% after purchasing over 5.82 million additional shares on May 4. Capital Group is well known for its investment philosophy focused on long-term corporate value rather than short-term returns.

Foreign investors have been net buyers of KT&G shares on the Korea Exchange for 24 consecutive trading days. As of this day, the foreign ownership ratio stands at 50.80%. Amid an earnings-driven rally in the domestic stock market, particularly in the semiconductor sector, investors are betting on KT&G’s growth potential. In fact, KT&G’s consolidated sales in the first quarter of this year amounted to 1.7036 trillion won, marking a 14.3% increase year-on-year, and operating profit surged by 27.6% to 364.5 billion won, both exceeding market consensus.

In particular, overseas conventional cigarette operations drove growth. Overseas cigarette sales reached 559.6 billion won, up 24.6% year-on-year, and operating profit soared by 56.1%. Sales volume and unit price rose simultaneously, resulting in the highest quarterly earnings ever. The proportion of overseas sales in KT&G’s tobacco business surpassed 57%. Next-generation product (NGP) sales also jumped by 51.5% compared to the same period last year, maintaining strong momentum.

KT&G’s policy to expand dividends in the second half of the year is cited as another reason for increasing foreign investor interest. KT&G has shifted its shareholder return strategy from share buybacks to strengthening dividends, and has already exceeded its share buyback target for next year earlier this year. Furthermore, with the completion of overseas cigarette factories, the burden of large-scale capital expenditures has been reduced, further increasing the likelihood of enhanced dividends. Based on earnings growth from global business expansion, KT&G continues to pursue strengthened dividends and new shareholder return policies for the second half of the year.

As a result, KT&G’s share price has soared over 60% year-to-date, setting a new record high during the previous session by reaching 189,500 won.

Meanwhile, as KT&G approached the KOSPI 8,000 mark, a wave of profit-taking led to a decline of more than 4% from the previous day.

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