[Click eStock] "HiteJinro, Profitability Improvement through Price Increase and Marketing Cost Reduction"

Korea Investment & Securities maintained its buy rating and target price of 29,000 KRW for HiteJinro on the 12th.

Researcher Eunji Kang of Korea Investment & Securities stated, "Profitability improvement achieved through manufacturing cost reduction due to price increases and marketing cost savings remains a valid investment point," adding, "On the other hand, the stock price still remains at a bottom level and does not reflect any expectations for annual operating profit growth."

HiteJinro's first-quarter performance is expected to meet market expectations with sales of 625.2 billion KRW and operating profit of 47 billion KRW. Domestic soju sales are estimated at 313.8 billion KRW. Despite B2C price reductions due to the introduction of the standard sales ratio, shipment volume is expected to have declined due to the downturn in the dining-out market; however, the price increase implemented in November last year is expected to have helped defend against sales decline. Domestic beer sales are estimated at 180.1 billion KRW. Along with the price increase effect, market share in the beer segment is analyzed to have increased since the launch of Kelly, and shipment volume is also expected to have risen compared to the same period last year.

Operating profit for the second quarter is projected at 186.4 billion KRW. Since the third quarter of last year, HiteJinro has been reducing marketing expenses and remains strongly committed to improving profitability through marketing cost savings. Even considering the possibility of additional spending to increase market share in the liquor market within the year, the outlook for operating profit growth in 2024 remains unchanged. The recently launched new product Jinro Gold also involves limited excessive marketing expenditure. As a product leveraging the recognition of existing products, it allows for strategic market entry, and the launch of a low-alcohol product is also expected to secure additional market share in the soju segment.