What’s Happening with KT&G?
KT&G announced its corporate value enhancement plan on September 23, 2025. The company reported remarkable growth in its heat-not-burn tobacco segment, coupled with a strengthened shareholder return policy including share buybacks, cancellations, and increased dividends.
Key Analysis and Investment Implications
- Surging Profitability: HNB business operating profit increased by 127.8% year-on-year, with overall group operating profit also growing by 24.1%. This is a key factor raising expectations for future earnings improvement.
- Improved Financial Structure: KT&G strengthened its financial soundness and secured resources for shareholder returns through CAPEX execution and non-core asset liquefaction. The stable interest rate environment is also positive.
- Aggressive Shareholder Return: Dividends increased to at least KRW 6,000 per share in 2025 (up KRW 600 YoY), with plans for KRW 560 billion in share buybacks and 5-6% cancellation. An additional KRW 276 billion in shareholder return is planned, a 171% increase compared to 2024. The company aims to achieve a TSR of over 100%.
Key Takeaways and Action Plan for Investors
- Maintain Buy Rating: Considering the solid fundamentals and shareholder return policy, KT&G is considered an attractive investment.
- Continuous Monitoring: Continuous monitoring is required for the continued growth of the HNB business, the implementation of the shareholder return policy, and efforts to secure competitiveness in new businesses.
- Long-Term Perspective: It’s important to focus on long-term growth potential rather than short-term market volatility.