[Click eStock] "Hite Jinro Faces Falling Beer Sales... Target Price Lowered"

KB Securities Lowers Hite Jinro Target Price to 22,000 Won

On October 1, KB Securities announced that it had lowered its target price for Hite Jinro to 22,000 won from the previous 25,000 won, citing a decline in beer sales volume and a prolonged industry slump, while maintaining its 'Buy' investment recommendation.

KB Securities also revised its 2026 earnings estimates for Hite Jinro downward to 2.465 trillion won in revenue (-1.4% year-on-year) and 172 billion won in operating profit (+14.5%). The previous estimates were 2.591 trillion won in revenue and 215 billion won in operating profit.

For the third quarter on a consolidated basis, the company is forecast to post revenue of 668.5 billion won (-0.2%) and operating profit of 58.4 billion won (+7.5%), slightly surpassing market expectations. The soju business is projected to see growth in both revenue (+2.4%) and operating profit (+8.3%) due to increases in exports to North America and Southeast Asia and a reversal of wage expenses related to gold subsidies.

During the same period, however, beer sales volume is expected to fall by 6% despite last year's price hike base effect, as the industry downturn persists, leading to a 5.3% year-on-year drop in revenue. Nevertheless, a decline in the proportion of can and PET sales, which have high packaging costs, along with reduced marketing expenses during the peak season, is expected to help maintain the operating margin (+13.5%) at a level similar to a year ago.

The brewery in Vietnam, which is scheduled for full-scale operation this December, is expected to be a major variable in Hite Jinro's future earnings. The brewery will be able to manufacture 1 million cases of fruit soju, which is more than a 30% increase over the current sales volume. Eun Ae Ryu, a research analyst at KB Securities, commented, "Substantial contributions to earnings, such as increased sales in China and Southeast Asia, are expected beginning in the second quarter of next year," adding, "This year's performance will hinge on the timing of price increases and the scale of cost reductions, while next year's results and corporate value will depend on the fruit soju business."

She added, "Although investors will need to wait until confirmed results are available, considering the 4.6% dividend yield, we believe downside risk to the share price is limited."

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