[Click eStock] "KT&G, Implementing Top-Level Shareholder Returns in Korea... Target Price Up"

Target Price Raised by 8% Compared to Previous Level

On the 6th, NH Investment & Securities evaluated KT&G, stating that the performance improvement in its core tobacco business continues and that it is implementing one of the best shareholder return policies in the country. Consequently, the target stock price was raised from 120,000 KRW to 130,000 KRW. The investment opinion was maintained as 'Buy.'

Joo Young-hoon, a researcher at NH Investment & Securities, explained, "The upward revision of the target price reflects the valuation increase of global tobacco peers and the effect of a reduction in the number of shares due to planned treasury stock cancellations." He added, "KT&G is currently repurchasing a total of 3.61 million shares, and considering the scale, this is sufficient to act as a factor defending corporate value amid increased market volatility." He continued, "Although KT&G is currently regarded as having one of the best shareholder return policies domestically, it has announced plans to reveal new corporate value enhancement strategies in the second half of the year, so it is worth watching with expectations."

KT&G's performance guidance for this year projects sales to increase by 2.5?3.0% year-on-year, with operating profit expected to remain at a similar level to the previous year. Researcher Joo noted, "While growth may appear stagnant, this is due to a significant decrease in operating profit from the real estate division following a mid- to long-term business direction review. The core tobacco business continues a steady growth trend, supported by favorable results in electronic cigarettes (NGP) and overseas cigarette businesses, so fundamentally there is no problem. From next year, when the real estate business base stabilizes, a turnaround in consolidated performance is also possible."

The increased likelihood of resuming the U.S. business, which had been temporarily suspended since 2021, is also seen as a positive factor. Researcher Joo stated, "Currently, KT&G has signed a memorandum of understanding with Philip Morris International (PMI) to cooperate on submitting the pre-market tobacco product application (PMTA) for U.S. NGP sales. Although some procedures and time are required before actual sales can begin, this is sufficient to generate expectations for overseas business expansion."