[Click eStock] "KT&G, Positive Shareholder Returns and Performance... Target Price Maintained"

NH Investment & Securities maintained a buy rating and a target price of 140,000 KRW for KT&G on the 15th, stating that "both shareholder returns and performance are strong."

On the same day, Younghoon Joo, a researcher at NH Investment & Securities, said, "We focus on the top-level shareholder returns in Korea and the growth of the three core businesses. Continuous corporate value growth is expected."

KT&G disclosed its corporate value enhancement plan last year, setting approximately 3.7 trillion KRW (2.4 trillion KRW in dividends and 1.3 trillion KRW in treasury stock) as resources for shareholder returns by 2027. After generating about 1 trillion KRW in cash through the liquidation of non-core assets, additional shareholder returns using these funds are also planned.

In the fourth quarter of last year, consolidated sales and operating profit are expected to increase by 1% and 17%, respectively, compared to the same period last year, reaching 1.4534 trillion KRW and 231.2 billion KRW. Researcher Joo noted, "Costs related to construction based in Suwon are expected to occur in the real estate business segment, so performance is likely to slightly miss market expectations," but added, "Since the tobacco business, the core operation, is performing well, the negative impact on the stock price will not be significant."

He also said, "Although the total demand for domestic heated tobacco products (NGP) continues to decline, KT&G's market share increase effect will allow for relative defense," and "Overseas cigarette sales will continue double-digit growth with both price increases and volume growth occurring simultaneously." Domestic NGP penetration is expanding, and market share is expected to continue rising at 46.0%. The health and functional food business segment is expected to maintain profitability due to improved overseas business performance in China and other markets.

Researcher Joo emphasized, "We positively evaluate the top-level domestic policy with a total shareholder return rate exceeding 100%," and added, "Not only shareholder returns but also performance improvement trends are occurring centered on the three core businesses: overseas cigarettes, NGP, and health and functional foods." He also noted, "As asset efficiency and profitability improve, the return on equity (ROE) growth trend is expected to continue."