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BlackRock Acquires 6.15% Stake in KT&G
Capital Group Expands Stake to 7.21%
President Kyungman Bang Makes Bold 'BUY KT&G' Move

Global asset management firms are competing to acquire shares of KT&G, drawing attention to the reasons behind this trend. As foreign institutional investors continue to show interest, the foreign ownership ratio of KT&G has surpassed 51%. Analysts attribute this to the growth of overseas tobacco operations, shareholder return policies, and strengthened communication with foreign investors, which has been led directly by President Kyungman Bang (pictured).

According to the Financial Supervisory Service's electronic disclosure system on June 14, BlackRock, the world's largest asset manager, purchased an additional 467,350 shares (1.14%) of KT&G on June 10. After holding 5.01% at the end of January this year, BlackRock increased its stake to 6.15% by acquiring more shares in approximately four months.

Previously, Capital Group, a major U.S.-based asset manager, also acquired 1,663,611 additional shares of KT&G on June 9, raising its stake to 7.21%. As foreign capital continues to flow in, KT&G's foreign ownership ratio reached 51.04% as of June 12.

Currently, the largest shareholder of KT&G is IBK Industrial Bank of Korea, holding a 9.16% stake, followed by the National Pension Service at 8.8%. First Eagle, a U.S. investment firm, holds 8.61%, Capital Group 7.21%, and BlackRock 6.15%. Global institutional investors have thus secured top spots on KT&G's list of major shareholders.

Foreign Investors Bet on KT&G's Stable Growth Potential

The market interprets this increase in foreign ownership as a sign of trust in KT&G's mid- to long-term growth potential. Even as the domestic tobacco market has matured, KT&G has continued to expand its overseas business, which has enhanced its investment appeal by securing new growth drivers.

In the past, KT&G was viewed as a company highly dependent on the domestic cigarette market. Critics pointed out clear growth limitations due to the declining number of smokers in Korea and stricter health regulations. However, in recent years, the company has expanded its overseas business, particularly in Indonesia, Central Asia, the Middle East, and Eastern Europe, fundamentally changing its corporate structure. In fact, KT&G has broadened its international sales network, focusing on these regions.

As a result, KT&G posted consolidated sales of KRW 1.7036 trillion and an operating profit of KRW 364.5 billion in the first quarter of this year. These figures represent increases of 14.3% and 27.6%, respectively, compared to the same period last year. Notably, the overseas cigarette business drove the improved performance. Overseas cigarette sales totaled KRW 559.6 billion, up 24.6% year-on-year. This is the result of strategic price increases and expanded sales. The efficiency improvements in cost and selling, general, and administrative expenses further contributed, leading to a 56.1% increase in operating profit for the overseas cigarette division during the same period.

President Kyungman Bang Expands Communication with Foreign Investors

Kyungman Bang, President of KT&G / Photo by KT&G

President Bang's efforts to increase engagement with foreign investors have also contributed to the rise in foreign ownership. Together with the management team, President Bang has held more than 10 overseas non-deal roadshows (NDRs) with institutional investors annually, presenting the company's business performance and corporate vision. The company has continuously shared its overseas expansion strategy and shareholder return plans, strengthening communication with the market.

The shareholder return policy is also cited as a factor enhancing investment appeal. In April, KT&G canceled all of its 10,866,189 treasury shares in accordance with the amended Commercial Act. This amounted to KRW 1.8515 trillion, representing 9.5% of total shares outstanding.

KT&G plans to announce a new shareholder return policy in the second half of this year, which is expected to include increased dividends and the use of treasury shares. KT&G is regarded as one of Korea's leading high-dividend stocks. Since its listing in 1999, the company has consistently paid annual dividends for 27 consecutive years, and since 2023, it has introduced a semi-annual dividend system. Last year, the dividend per share increased by 11.1% year-on-year to KRW 6,000. Compared to the 1999 dividend per share of KRW 1,250, this represents an increase of about 380%.

Over the past five years, dividends per share have also risen: KRW 4,800 in 2021, KRW 5,000 in 2022, KRW 5,200 in 2023, KRW 5,400 in 2024, and KRW 6,000 in 2025. Under the value enhancement plan announced in November 2024, KT&G intends to return more than KRW 2.4 trillion to shareholders over four years from 2024 to 2027. Following a KRW 588.4 billion cash dividend in 2024, the company paid out approximately KRW 627.4 billion in dividends last year. Morgan Stanley projected, "KT&G could raise its dividend per share to KRW 7,000 this year."

The improved financial performance and expectations for further shareholder returns are reflected in the share price. After dipping below KRW 100,000 in March last year, the stock has consistently exceeded KRW 180,000 this month. This is nearly a twofold increase in about one year and three months.

A KT&G representative stated, "The simultaneous inflow of both passive and active funds indicates that the company's value is being recognized as attractive by investors," adding, "We will continue to focus on driving earnings growth and, based on this, implement shareholder return policies to enhance shareholder value."

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