[Click e-Stock] "KT&G: Mid- to Long-Term Buy Strategy Valid... Target Price Raised"

Hana Securities stated that KT&G’s stock price is expected to remain range-bound in the short term, but recommended a mid- to long-term buying strategy. The target price has also been raised from 180,000 won to 210,000 won.

On July 15, Eunju Shim, a research analyst at Hana Securities, said in a report on KT&G, "Given the company’s proactive shareholder return policy, a mid- to long-term buying strategy appears valid whenever the stock price undergoes corrections." The investment rating remains "Buy." The newly suggested target price of 210,000 won represents a potential upside of 23% from the current price. On the previous day, KT&G closed regular trading at 171,000 won per share.

KT&G’s consolidated revenue and operating profit for the second quarter are estimated at 1.6374 trillion won and 397.5 billion won, respectively. These figures represent increases of 5.8% and 13.6% year-on-year. Shim explained, "Strong domestic cigarette sales and a favorable exchange rate are expected to lead to strong earnings." Domestic cigarette demand in the second quarter is believed to have grown by about 1% from a year earlier. Considering that total demand has typically declined by about 2%, this is a significant surprise.

This year, the company’s earnings are projected to follow a weaker first half and a stronger second half pattern. Shim assessed, "While the first half will see a meaningful year-on-year improvement in profits, the second half faces some headwinds due to base normalization, short-term volatility in export sales of conventional cigarettes, and a challenging real estate comparison base." She predicted that, given the dividend yield, the stock price would likely remain in a range-bound movement with an upper limit around 190,000 won in the near term.

However, Shim also emphasized, "The visibility on the company’s guidance remains high," forecasting that this year’s consolidated earnings would be about 1.5 trillion won, representing an increase of around 10% from the previous year. She added, "This is because domestic cigarette demand has remained unexpectedly robust, and the exchange rate effect is likely to continue to have a positive impact throughout the year."

This year’s expected dividend per share (interim plus year-end) has also been raised to 7,500 won. Last year’s dividend per share totaled 6,000 won, including an interim dividend of 1,400 won and a year-end dividend of 4,600 won.

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