KT&G, Continues to Strengthen Shareholder Returns... “Defensive-Stock Appeal Comes to the Fore”

[Financial News] Korea Investment & Securities maintained its ‘Buy’ rating and KRW 230,000 target price for KT&G on the 14th, saying the company’s appeal as a defensive stock is high.
Choi Go-woon, an analyst at Korea Investment & Securities, noted, “KT&G is strengthening its growth drivers through overseas business expansion and differentiation in next-generation tobacco products (NGP). The global cigarette business is offsetting stagnation in the domestic market as both volumes and average selling prices (ASP) improve, and overseas sales account for nearly 60% of cigarette revenue.”
Choi added, “By expanding local production bases in Kazakhstan, Indonesia, and other countries, overseas production capacity is expected to exceed 50 billion cigarettes, with the share of overseas production projected to rise to 60% by 2028. Thanks to the company’s efforts to build an independent global business base, major product lines such as Esse have established a premium image and were able to grow sales without disruption despite external uncertainties caused by the war in the Middle East this year.”
The analyst also said KT&G’s valuation appeal has become more prominent following the recent share-price adjustment. Choi said, “As KT&G was the top outperformer in the first half, it took a breather in the second half as other legacy companies drew more attention through sector rotation within the food and beverage industry. Considering the possibility that the industry-wide pause may continue, KT&G will become even more necessary as a defensive stock.”
Attention was also drawn to the company’s strengthened shareholder returns. KT&G raised its shareholder-return targets and outlined its long-term overseas business plans at its CEO Investor Day last September.
Choi assessed, “As earnings are also improving beyond expectations this year, the possibility of a dividend increase remains, and new achievements can be expected from the global NGP business. Announcing a surprise plan every year is not easy, but the fact that the company consistently maintains overwhelming shareholder returns alone makes it attractive as a defensive stock.”

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