IBK Securities analyzed on the 21st that without a recovery in the industry environment, a significant rebound in HiteJinro's stock price is unlikely. They maintained a target stock price of 25,000 won and an investment opinion of 'buy.' The closing price of HiteJinro on the previous trading day was 19,260 won.
HiteJinro's consolidated revenue for the first quarter of this year was 612.8 billion won, a decrease of 1.3% compared to the previous year, while operating profit was 62.7 billion won, an increase of 29.7% during the same period. The operating profit exceeded market expectations by 20%, largely due to a reduction in selling, general and administrative expenses.
By sector, the beer business's revenue and operating profit decreased by 9.8% and 55%, respectively, recording 173.9 billion won and 3.3 billion won, leading to poor performance. Kim Tae-hyun, a researcher at IBK Securities, explained, "The decline in the dining out market and the push-out effect due to price increases by competitors contributed to this."
In contrast, the revenue and operating profit of the soju business increased by 4% and 53.7%, respectively, generating 389.7 billion won and 59.6 billion won. Researcher Kim noted, "In the soju sector, sales slightly increased due to improved market share, and reduced marketing expenses led to improved profitability."
As recent price increases in beer products such as Terra and Kelly averaged 2.7%, the decline in the beer sector's performance in the second quarter is expected to ease compared to the first quarter. Researcher Kim projected, "Despite low expectations for top-line growth due to weak industry conditions, profitability improvements through cost-saving measures will continue."
However, Researcher Kim pointed out that the prolonged weakness in the liquor market, linked to sluggish domestic consumption, means that temporary performance improvements from price increases are not translating into stock price gains. In fact, despite a 68% surge in operating profit last year due to price increases in soju and beer, the stock price fell by 13.2%.
Researcher Kim stated, "Considering that the KOSPI fell by 9.6% during the same period while the food and beverage sector rose by 1.4%, the market is showing a cautious evaluation of profit improvements made without industry recovery."
He added, "For a significant recovery in stock prices, there must also be a structural recovery in the overall industry environment."