[Click e-Stock] "HiteJinro Anticipates Improved Alcoholic Beverage Consumption in Second Half"

On June 17, IBK Investment & Securities maintained its target price for HiteJinro at 25,000 won, expressing expectations for an improvement in alcoholic beverage consumption in the second half of the year.

IBK Investment & Securities projected that HiteJinro's second-quarter results would fall short of market expectations. Sales are estimated at 660.6 billion won, down 0.7% year-on-year, while operating profit is expected to reach 66.1 billion won, a decrease of 3.2% compared to the same period last year.

Kim Taehyun, a researcher at IBK Investment & Securities, explained, "Although the trend of reducing selling and administrative expenses, including advertising and promotional costs, is continuing, last year's high base and the sluggish soju market are likely to weigh on the results."

However, the company noted that the improvement in soju market share is continuing. After surpassing a 70% share (by sales volume) in March, this level was maintained in April. Nevertheless, due to a contraction in the dining-out sector, the market is expected to experience negative growth. Compared to the same period last year, soju sales and operating profit are projected to decrease by 2.3% and 5.7%, respectively.

The beer segment is positive. The inventory push that resulted from a competitor's price hike in the first quarter has now ended. Moreover, ahead of a planned increase in beer shipment prices, there has been a surge in pre-orders for brands such as Terra and Kelly. As a result, beer sales are expected to rise by 3.6% and operating profit by 13.1% year-on-year.

Kim expressed expectations for an improvement in alcoholic beverage consumption in the second half of the year. He stated, "In the short term, it does not seem easy to raise soju prices due to the government's policy of price stability. However, if livelihood support payments are distributed in the second half, there is a valid possibility of a recovery in overall food and beverage consumption?including dining out, supermarkets, and convenience stores?similar to the cases in 2020 (emergency disaster relief funds) and 2021 (win-win consumption support funds), which could lead to improved demand for alcoholic beverages."