A “standout defensive stock” amid market uncertainty ... KT&G Corporation’s overseas growth to pave the way for higher dividends

[Financial News] Korea Investment & Securities expects KT&G Corporation to post record operating profit in the third and fourth quarters, buoyed by growth in its overseas tobacco business. It said the company’s appeal as a defensive stock would come to the fore as uncertainty in the stock market grows. The firm maintained its “Buy” rating and target price of 230,000 won.
Korea Investment & Securities analyst Choi Go-un said on the 15th, “KT&G Corporation’s operating profit for the third and fourth quarters is expected to rise 11% year on year to 515 billion won, exceeding the market consensus by 4%.” Choi added, “With growth in the overseas tobacco business, the effects of domestic cost reductions and property-sale revenue reflected in the results, the company is expected to set new records for both revenue and operating profit.”
Operating profit is estimated to rise year on year by 11% to 411.3 billion won in tobacco, 2% to 73.1 billion won in health functional foods, and 42% to 29.4 billion won in real estate. Overseas cigarette revenue is expected to increase 10%, with both sales volume and average selling price (ASP) improving.
KT&G Corporation’s competitiveness in overseas markets is drawing attention. Analyst Choi explained, “In Kazakhstan, it rose to third place in market share less than three years after establishing a sales subsidiary,” adding, “Its flagship products, including ESSE, have built a premium image and are being chosen by younger consumers.” He went on to stress, “Given that overseas growth is still at an early stage, attention should be focused on fundamental product competitiveness rather than exchange rates.”
A new shareholder-return policy to be announced within the year was also cited as a factor that could enhance the company’s investment appeal. Analyst Choi said, “With one capital expenditure cycle now complete, overseas profit growth will translate into room to increase dividends.” He added, “When uncertainty across the stock market is high, the company is attractive simply in its role as a reliable defensive stock.”

[email protected] Im Sang-hyeok Reporter