[Asia Economy Reporter Oh Ju-yeon] Kiwoom Securities forecasted that Hite Jinro's operating profit for the third quarter of this year will exceed market consensus. The current stock price has adjusted downward from its peak due to concerns over declining market demand, but the investment opinion 'Buy' and the target price of 57,000 won were both maintained.
According to Kiwoom Securities on the 6th, Hite Jinro's consolidated sales and operating profit for the third quarter of this year are expected to increase by 14% and 28% year-on-year to 605.1 billion won and 63 billion won, respectively.
The market had been concerned about sluggish sales due to the second wave of COVID-19 centered in Seoul and the metropolitan area since mid-August, but from early September, the trend of increasing COVID-19 cases eased, and from mid-September, social distancing measures were relaxed, leading to a strong recovery in market demand compared to August, the analysis showed.
Accordingly, Hite Jinro's third-quarter separate basis sales of beer and soju are estimated to have grown by 18% and 17% year-on-year, respectively.
Marketing expenses are estimated to have decreased by about 10 billion won compared to the second quarter, and the third-quarter operating profit margin is expected to rise by 1.1 percentage points from the second quarter to 10.4%.
Researcher Park Sang-jun said, "The core brand 'TERRA' has a relatively high market share in the Seoul and metropolitan area on-trade channels," adding, "A sharp recovery in sales is expected in the short term."
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