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.
Frequently Asked Questions (FAQ)
What are KT&G’s main businesses?
KT&G’s main business is the manufacturing and sale of tobacco products. They also operate in various other sectors, including HNB (Heat-not-Burn), health functional foods, real estate, and pharmaceuticals/cosmetics.
What are the key points of this corporate value enhancement plan?
The key points are strengthening profitability based on the high growth of the HNB business, improving the financial structure, and an aggressive shareholder return policy.
What should investors be aware of?
Investors should consider potential risk factors such as the long-term decline in demand in the domestic tobacco market, intensifying competition in the health functional food business, and global economic and exchange rate volatility.
