[Click eStock] "HiteJinro, This Year's Performance Expected to Be Low-High"... Target Price Down

[Asia Economy Reporter Song Hwajeong] Yuanta Securities on the 15th forecasted that HiteJinro will show a performance trend of strong first half and weak second half this year, and lowered the target stock price from 50,000 won to 45,000 won. The investment opinion was maintained as 'Buy.'

HiteJinro recorded consolidated sales of 516.6 billion won and operating profit of 23.9 billion won in the fourth quarter of last year. This represents a decrease of 8% and 27%, respectively, compared to the same period last year. Researcher Park Eunjeong of Yuanta Securities analyzed, "It fell short of the lowered consensus by 27%," adding, "The alcohol market itself was depressed in the fourth quarter due to social distancing measures, which was a major factor weakening profit resilience, resulting in profitability being disappointing compared to expectations."

In the beer segment, sales are estimated at 164.9 billion won, down 11% year-on-year, and operating profit turned positive to 1.6 billion won. Researcher Park explained, "The beer market volume decreased by 17% in the fourth quarter, but HiteJinro's sales volume decreased by 13%," adding, "Despite unfavorable external conditions, sales of Terra increased, and the market share of the beer segment continued to expand thanks to increased volume of key brands." The soju segment is estimated to have sales of 309.5 billion won, down 8%, and operating profit of 21.6 billion won, down 33%. The soju market volume decreased by 12% in the fourth quarter, but HiteJinro's sales volume decreased by 9%, showing a relatively strong performance. Researcher Park said, "This is due to the strong brand awareness of Jinro Is Back and Chamisul," but added, "However, the fixed cost burden from the expansion of the Masan plant line likely caused the profit decline to be larger than the sales decrease."

Yuanta Securities projected HiteJinro's performance this year to be sales of 2.3298 trillion won and operating profit of 208.1 billion won, representing increases of 3% and 5%, respectively, compared to the previous year. Reflecting the downward revision of this year's performance estimates, the target stock price was also lowered. Researcher Park said, "This year, a performance trend of strong first half and weak second half is expected," adding, "In the first half, affected by ongoing social distancing, sales are expected to increase by 2% year-on-year while operating profit is expected to decrease by 20%. In the second half, with gradual improvement in demand following vaccination, sales and operating profit are expected to grow by 5% and 37%, respectively."