The Company With a Higher Target Price Thanks to Rising Tobacco Sales [Click e-Stock]

Yuanta Securities Raises KT&G Target Price
From 210,000 Won to 250,000 Won

On July 22, Yuanta Securities maintained its “Buy” investment rating on KT&G and raised its target price from 210,000 won to 250,000 won.

Hyunjung Son, a research analyst at Yuanta Securities, stated, “Considering the structural profit growth in overseas combustibles, the expanding market share of domestic tobacco products (NGP), and the strengthening of shareholder returns, the valuation gap with global tobacco companies could be narrowed.”

She estimated KT&G’s sales for the second quarter of this year at 1.6683 trillion won and operating profit at 406.7 billion won, up 7.8% and 16.2%, respectively, from the previous year. Of these, operating profit is expected to slightly exceed market expectations. Sales from the tobacco division are projected to reach 1.2057 trillion won with operating profit at 383.1 billion won.

As for overseas combustibles, sales are estimated at 544.2 billion won, representing a 16% increase year-on-year. She anticipates that, led by Russia and Kazakhstan, average selling prices (ASP) will rise and the proportion of premium products will further grow. Although overall sales growth may slow, due in part to a high growth rate in the first quarter and partial pre-order effects, profit growth is expected to outpace sales growth. She explained, “The growth of overseas combustibles continues to be driven not just by volume expansion, but also by improvements in price and product mix, supporting profit expansion.”

Son projects that KT&G’s full-year earnings for this year will surpass market expectations. She stated, “With the profit base of the tobacco segment being strengthened by overseas combustibles and domestic NGP, this year’s consolidated operating profit is expected to reach 1.5236 trillion won.”

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