[Weekly HOT Stocks] KT&G, 3rd in Individual Net Buying... "Earnings Upgrade Possible with Duty-Free Channel Recovery"

Purchased KT&G stocks worth 117.1 billion KRW from the 30th of last month to the 4th

[Asia Economy Reporter Geum Bo-ryeong] KT&G attracted attention from individual investors during this past week.

According to the Korea Exchange on the 5th, individual investors purchased KT&G stocks worth 117.1 billion KRW over five trading days from the 30th of last month to the 4th. During this period, the top stocks by net purchase from individual investors were Samsung Electronics in first place, Samsung Electronics Preferred in second, and KT&G in third.

The stock price showed a gradual upward trend over the week. The closing price, which was 82,500 KRW on the 30th of last month, rose to 83,400 KRW on the 1st, 84,200 KRW on the 2nd, 84,300 KRW on the 3rd, and 84,600 KRW on the 4th.

KT&G is one of the stocks expected to have further upward revisions in earnings if the duty-free channel recovers. Shin Young Securities forecast KT&G’s consolidated sales and operating profit for next year at 5.4495 trillion KRW and 1.5444 trillion KRW, respectively. Compared to the previous year, these figures represent increases of 3.1% and 4.5%, respectively.

Researcher Kim Jeong-seop of Shin Young Securities analyzed, "Next year, domestic and overseas market share expansion is expected to continue, and if the duty-free channel recovers, a steeper improvement in earnings will follow."

Operating profit is also estimated to increase this year. Although there is some impact from increased real estate sales revenue, the rise in domestic cigarette market share and recovery in sales volume in key export cigarette markets also contributed.

Researcher Cha Jae-heon of DB Financial Investment stated, "From the first half of next year, there are no additional factors that would worsen the performance of duty-free cigarettes and KGC, which were affected by COVID-19, due to the low base. Although difficulties persist in new markets such as South America and parts of Asia, considering the resumption of exports to the Middle East under favorable conditions and the expansion of distribution networks of the U.S. subsidiary, export cigarettes are expected to gradually improve." He explained, "It is understood that export contracts for e-cigarettes with Russia, Japan, and Ukraine were concluded very favorably for KT&G, and the effect of the company’s market share increase in the global tobacco market is expected to manifest in both e-cigarettes and combustible cigarettes."