NH Investment & Securities said on the 2nd that it would lower its target price for HiteJinro, saying a sales decline is inevitable due to the slump in the liquor market. The target price was adjusted from 28,000 won to 25,000 won, while it maintained a "buy" investment opinion.
HiteJinro's third-quarter revenue and operating profit are expected to be 679.6 billion won and 63.1 billion won, respectively. They are down 1% and 10% from a year earlier, respectively. On an operating profit basis, it is expected to slightly miss the market consensus.
In the soju institutional sector, revenue is expected to be 385 billion won and remain stable despite a decline in domestic liquor consumption. In particular, with the Vietnam plant scheduled to start operations in the second half of next year, overseas sales could expand.
In contrast, in the beer institutional sector, revenue is expected to be 231.8 billion won, down 6% from a year earlier. Although ex-factory prices were raised by an average of 2.7% in May, sales are likely to continue falling due to weak demand. Even with the distribution of people's livelihood recovery consumption coupons, performance improvement effects are unlikely.
Joo Young-hun, an analyst at NH Investment & Securities, said, "Although HiteJinro, the No. 1 player in the liquor industry, is firmly maintaining its market share, it is having difficulty defending sales due to the market slump," and analyzed, "The decline in liquor consumption following the reduction in after-work gathering culture since COVID-19 has not recovered."