LS Securities evaluated KT&G on the 24th as a growing dividend stock, considering its recently highlighted business competitiveness and aggressive shareholder return policy, noting a significant potential for stock price increase. The target stock price is 175,000 won, and the investment opinion is 'buy.'
KT&G's consolidated revenue for the second quarter is projected to be 1.5381 trillion won, with an operating profit of 347.9 billion won. This figure represents an 8% growth compared to the same period last year. Domestically, while sales slightly decreased due to a decline in demand for heat-not-burn tobacco, the overall revenue was boosted by double-digit growth in sales volume and average selling price abroad.
The health supplement business is expected to see a slight increase in revenue due to a profitability-centered sales strategy, anticipating a turnaround to operating profit. The real estate business is also experiencing an expanding atmosphere for revenue recognition in small and medium-sized development projects.
In the core tobacco business, next-generation products (NGP) in both heat-not-burn and liquid formats are expected to be launched by the end of this year. Considering the demand for device replacements, it seems that NGP will enter a full growth trajectory starting next year.
Researcher Park Seong-ho noted, "With the Kazakhstan plant that started operating in March and the Indonesian plant expected to operate next year, it is anticipated that supply capacity will expand and cost competitiveness will also increase," adding, "Although brand awareness is lower compared to global competitors, it is believed that there is potential for market share growth in emerging markets through an aggressive product localization strategy."
It is also necessary to pay attention to the shareholder return policy. KT&G's total shareholder return for this year is estimated to be about 1.154 trillion won, with a shareholder return rate reaching 104%. Among this, the dividends are expected to exceed 600 billion won, and the share buyback is projected to be similar to the previous year at 550 billion won.
Researcher Park explained, "The high shareholder return rate, coupled with the government's strong demand for corporations to adopt robust shareholder return policies, will likely emerge as a competitive investment point."