[E-Daily Reporter KIM YOON-JEONG ] KIWOOM Securities forecast that KT&G Corporation will post earnings that exceed market expectations, driven by solid performance in its tobacco division during the second quarter. The firm also predicted that expectations for increased dividends will grow ahead of the announcement of this year’s interim dividend and a new shareholder return policy. It maintained its “Buy (BUY)” investment rating and target price of 220,000 won.

On the 10th, Park Sang-jun, an analyst at KIWOOM Securities, stated, “KT&G Corporation’s second-quarter operating profit is expected to slightly exceed the market consensus, driven by better-than-expected domestic demand and a strong U.S. dollar,” adding, “Depending on the magnitude of the interim dividend increase, market expectations for a new shareholder return policy centered on ‘enhanced dividends’ are likely to strengthen.”
KIWOOM Securities projected that KT&G Corporation’s second-quarter consolidated operating profit would reach 400.7 billion won, a 14.5% increase year-over-year, slightly exceeding market consensus. Analyst Park noted, “Driven by better-than-expected domestic demand and benefits from the strong U.S. dollar, the tobacco division’s performance is expected to exceed our expectations,” adding, “Revenue in the tobacco division is projected to rise 12% year-over-year, and the operating profit margin is expected to improve by 0.7 percentage points.”
He continued, “Despite the burden of rising raw material costs, domestic demand for conventional cigarettes and cigarette-style e-cigarettes (NGPs) is stronger than expected, overseas sales of conventional cigarettes are steadily increasing, and the company is expected to benefit from the strong U.S. dollar.” He added, “Operating profit in the health functional foods segment is also expected to increase as domestic sales recover.”
The announcement of this year’s interim dividend and a new shareholder return policy was also cited as a key variable to watch. Analyst Park said, “It is highly likely that the company will announce this year’s interim dividend during its second-quarter earnings release, as it did last year.” He added, “Since the company stated during its first-quarter earnings release that it plans to announce a new shareholder return policy centered on ‘strengthening dividends’ in the second half of the year, market attention is expected to focus on the scale of this year’s interim dividend increase.”
He continued, “If the increase in this interim dividend is substantial, market expectations for this year’s and next year’s projected dividends per share (DPS) are likely to be significantly revised upward,” adding, “The stock price may already be factoring in expectations for the new shareholder return policy centered on ‘dividend enhancement.’”
Analyst Park assessed, “The company’s capacity for shareholder returns is steadily expanding, driven by strong growth in overseas cigarette sales and a reduction in capital expenditures (Capex),” adding, “In particular, with the introduction of a new shareholder return policy centered on ‘dividend enhancement,’ market expectations for projected DPS this year and next year are likely to be significantly revised upward.”