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(Photo = Yonhap news) |
[Alpha Biz= Reporter Kim Minyoung] Sangsangin Securities maintained its investment opinion 'buy' and target stock price of 110,000 won for KT & G on the 16th. Expectations for this year's first-quarter earnings season have lessened as operating profit is expected to decrease in all divisions, but the stock price is unlikely to fall as the overseas performance trend of the main business is solid and there is room for an increase in domestic cigarette prices.
"KT & G expects 1.37 trillion won in sales and 278.5 billion won in operating profit in the first quarter of this year," said Sangsangin Securities Co. "Despite strong domestic and overseas NGP (e-cigarette) and overseas cigarette sales, sales and profits will grow in reverse due to the base of real estate and NGP performance and preemptive awareness of long-term sales."
"Tobacco business sales are expected to grow 7% year-on-year (compared to the same period last year)," Sangsangin Securities said. "Domestic cigarette sales are expected to fall by 2% due to the decrease in total market demand and the transition to NGP."
"On the other hand, mid-term exports of overseas cigarettes, which had been delayed in the previous quarter, were reflected in March and are expected to grow due to the effect of price hikes across the country," said Sangsangin Securities Co. "NGP continues to grow centered on sticks in Korea and overseas, improving the quality of sales, but overall sales will decline due to the adjustment of the volume of overseas devices with high ASP (average sales unit price)."
Sangsangin Securities added, "Operating profit is expected to fall as sales decline."
Alphabiz Kim Minyoung (kimmy@alphabiz.co.kr)
