With daytime temperatures in the 30s across the country, summer is officially here, and one of the foods that comes to mind is “chimichurri” (chicken and beer). It tastes great on weekend nights while watching TV with family, lovers, and friends.
HiteJinro’s stock drops 35% in one year
But retail investors here are swallowing a bitter pill. This stock is Hitejinro. The closing price on May 19 was 23,400 won. This is a 35.18% drop from the price of 36,100 won a year ago (May 19, 2022). The decline in the beer market share is the reason for the decline in investor interest.
On a consolidated basis, the company posted sales of 60.35 billion won (up 3.4% year-on-year) and operating profit of 38.7 billion won (down 33.4% year-on-year). “Profit declined due to advertising costs for new beer products, but exceeded market estimates by 8.3%,” said Evest Investment & Securities in a report. “The soju segment generated KRW 366.3 billion in sales (up 3.5% year-on-year) and KRW 43.4 billion in operating profit (down 12.4% year-on-year),” said Oh Ji-woo, a researcher at Evest Investment & Securities. “As of the first quarter, it maintained a high share of 67%, with Jinro Easeback accounting for 18%.” Beer posted sales of 183.8 billion won (up 0.4% year-on-year) and an operating loss of 3.5 billion won (turning a loss).
Hite Jinro’s new beer ‘Kelly’ launched in April. The advertising model is Son Seok-gu. Courtesy of Hitejinro
“The company has succeeded in its ‘soju two-track strategy’ of adding Jinro Easeback to Chamisul,” Oh said. “We expect a significant profit improvement next year due to the expected increase in beer share of Terra and Kelly.” He maintained a target price of KRW32,000. The price target was maintained at 32,000 won.
“Competition in the alcoholic beverage market is expected to intensify as the industry enters its peak season in the second quarter and the effects of the prolonged pandemic are beginning to kick in,” said Kim Hye-mi, a researcher at Sangsangin Securities. “While an increase in marketing expenditure is inevitable this year, it is worth paying attention to the pace of sales growth.” Kim forecast sales of 2.589 trillion won and operating profit of 163.7 billion won this year. The average price target for HITEJINRO from 10 brokerages as of Nov. 19 is 30,800 won.
Monthly graph of Hitejinro stock price.
“Overseas sales up 24%… Profits will be shared with shareholders”
On the 20th, a representative from HiteJinro said, “We will continue to aggressively market Tera, stabilize Kelly, and consolidate our dominance in the soju market through aggressive sales and marketing this year.” In particular, “Kelly, which was launched last month, has a soft and intense carbonation through a double-aging process using 100% Danish premium malt.” He added, “For the first time in Korea, we tried to differentiate it from existing beers by applying an amber-colored bottle.” Kelly, which features Son Seok-gu as its advertising model, sold 1 million cases within 36 days of its launch먹튀검증. This is the shortest period of time for a domestic beer brand (Terra did it in 39 days).
In the soju segment, Jinro’s Zero Sugar renewal and Pink Label launch are gaining traction with younger consumers. Chamisul’s advertising model is IU, emphasizing its clear image. The company plans to increase contact points with consumers by operating a playground for adults, Thickened Sanghoe.
IU is the advertising model for Hitejinro’s soju brand Charmisul. Courtesy of HITEJINRO
When asked about new growth engines, he said, “Overseas sales increased by 24% last year,” and “the soju segment in particular increased by 32%, with an average annual growth rate of 17.1% over the past five years.” The U.S., China, and Southeast Asia have responded well, and the company plans to expand into new export markets based in Asia.
The company is also investing heavily because it sees a need for new food. “From 2020 to the end of last year, we invested in 19 startups,” he said. “We are gradually increasing the amount of investment and will contribute to the company’s profit in the future.” HITEJINRO is known to have made equity investments in food platform companies such as Life with a Table (service name Permil) and Stone Eye (service name Dedication), an O2O (online-offline connection service) platform for gym memberships.
When asked what efforts are being made for shareholders, he said, “Last year, we paid a year-end dividend of 950 won per share (up 150 won from the previous year).” He emphasized that the company’s policy of sharing profits with shareholders is firm.
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