April 19, 2024

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[THE INVESTOR] KT&G’s earnings in the fourth quarter last year have failed to meet market consensus, said Hanwha Investment and Securities on Feb. 2, lowering the target price to 142,000 won (US$131.79) from 156,000 won.

Its revenue in the period declined 5 percent on-year to 1.05 trillion won and operating profit dropped 27.1 percent to 222.4 billion won, well below market expectations, said analyst Choi Seon-mi.

Sales of regular tobacco in domestic market shrank 12.8 percent while those overseas inched up 0.1 percent, and strong won brought down the overseas tobacco revenue by 0.6 percent, explained the analyst. 

Member countries of Gulf Cooperation Council imposed 100 percent special consumption tax on tobacco in December and tobacco smuggling in the region will expand, as a result of which major tobacco firms including KT&G will inevitably suffer, said Choi. 

Its conservative earnings guidance for this year also has dampened expectations, pointed out the analyst. 

The rise of divided per share to 4,000 won from last year’s 3,600 won is bolstering the stock price, though, she added maintaining a “buy” recommendation. 

By Hwang You-mee (glamazon@heraldcorp.com)