Yuanta Securities Korea analyzed on the 4th that as the productivity of overseas factories is expected to be optimized from the second half of this year, improvement in revenue is anticipated for KT&G. KT&G started full operation of its electronic cigarette (NGP) factory in Kazakhstan and its factory in Indonesia from early this year. The second half of the year is expected to see significant production optimization.
Son Hyun-jung, a researcher at Yuanta Securities Korea, noted, "KT&G is a rare global corporation in the beverage sector with a tobacco export ratio of 48%," adding, "It has established a model that combines a distribution structure with local production bases, securing pricing power and protecting revenue."
Along with the improvement in revenue, the industry-leading shareholder return policy is also gaining attention. The expected dividends per share (DPS) this year are 5,600 won, and the current dividend yield based on the stock price is at 5.2%. The scale of shareholder return from 2024 to 2027 is expected to reach 3.7 trillion won. Yuanta Securities Korea estimates KT&G's total return rate for this year at 103.9%.
KT&G plans to invest 1.3 trillion won in its stock buyback. It aims to reduce 20% of its total issued shares to support the stock price. The budget for shareholder return will be secured by liquidating non-core assets.
Researcher Son stated, "Considering brand awareness, cash generation capability, and the return policy, it remains structurally undervalued," adding, "The steady performance trend and strong return strategy will serve as a deterrent and support factor for the stock price in the second half of the year."
Yuanta Securities Korea maintained its target stock price for KT&G at 150,000 won and its investment opinion at 'buy.'