Shinhan Investment Securities analyzed on the 28th that HiteJinro could see a decline in profits in the short term due to increased marketing expenses amid a sluggish alcoholic beverage consumption economy. They adjusted the target stock price down from the previous 27,000 won to 25,000 won while maintaining the investment opinion 'buy.' The closing price of HiteJinro on the previous trading day was 19,200 won.
As the sluggish alcoholic beverage market continues for a long time, it is noted that the overall alcoholic beverage market in the first half of the year has seen a 6% decrease in sales compared to the previous year.
Jo Sang-hoon, a research officer at Shinhan Investment Securities, said, "At least soju has performed well. Beer, wine, and whiskey have seen declines of double digits," adding, "In this poor business environment, the company responded with profit-centered strategies such as reducing marketing expenses."
However, recent effects from the people's livelihood recovery consumption coupons have brought about changes to this company strategy. Shinhan Investment Securities indicated that in the second half, HiteJinro is shifting from a profit-centered management approach to a market revitalization strategy focused on beer, concentrating on strengthening point-of-sale marketing that is directly linked to sales.
Jo noted, "In the short term, an increase in marketing expenses is unavoidable, but there are expectations for increased market share and leverage effects due to proactive market response strategies during the peak season that align with the issuance of the people's livelihood recovery consumption coupons."
He continued, "The valuation of HiteJinro is historically undervalued," adding, "The urgent issues have been resolved through beer price increases in the first half, but the increase in sales and expansion of market share will determine the future valuation level."