KT&G to beat earnings estimates

KT&G, the KOSPI-listed tobacco maker, is expected to “surprise” the market by posting solid earnings in the first quarter of this year, analysts say.

Although the country’s representative sin stock is likely to see its consolidated operating profits fall 27.5 percent to 310.6 billion won ($268.8 million) on-year, the company will perform above the market consensus of 271.5 billion won.

“Low base effect and high exchange rate (a weak won) spurred its profitability,” said Hong Se-jong, an analyst at Shinhan Investment, noting that its overseas cigarette sales increased 32 percent.

The analyst raised KT&G’s valuation from 137,000 won to 145,000 won per share, with a multiple of 14.6. The National Pension Service, Korea’s pension fund manager, is the biggest shareholder with an 8.59 percent stake in KT&G.

By Park Hyong-ki (hkp@heraldcorp.com)