With market volatility sharply rising — including sidecar triggers for four consecutive trading sessions — KT&G's stock has traced a steady upward curve. The strength came from the stability of its core business centered on manufacturing and selling cigarettes, while its leading domestic shareholder return policy and overseas business-driven growth have also drawn attention. Many global asset managers pursuing long-term investment have recently increased their KT&G holdings.
According to the Korea Exchange on Wednesday, KT&G closed at 175,800 won on June 4 and ended trading at 185,100 won on June 10, with its share price rising 5.3%. On the same day, according to alternative trading system Nextrade (NXT), the stock was down a modest 0.70% in the pre-market as of 8:34 a.m., a more moderate decline than technology stocks or large-cap stocks.
KT&G is regarded as a stock that combines high earnings stability, a shareholder return policy, and growth momentum. On a consolidated basis, it posted revenue of 1.7036 trillion won and operating profit of 364.5 billion won in the first quarter, up 14.3% and 27.6% respectively from the first quarter of last year. In addition, its shareholder return policy of spending 3.7 trillion won on dividends and share buybacks from 2024 to 2027, along with its overseas business growth, has drawn attention. KT&G's first-quarter overseas cigarette business revenue was 559.6 billion won, up 24.6% from the first quarter of last year.
Many of the world's leading asset managers hold KT&G in their investment portfolios. Major foreign shareholders currently holding more than 5% of KT&G include BlackRock, First Eagle, and Capital Group. The Government of Singapore Investment Corporation (GIC), a leading global sovereign wealth fund, also holds more than 5% of KT&G. Capital Group expanded its KT&G stake from 5.61% to 7.21% in early last month. All of these are regarded as firms pursuing long-term value investing.
The securities industry is focusing on KT&G's stable business structure amid market volatility. KB Securities published a report titled "When Defensive Stocks Shine" on June 4, maintaining a "buy" rating and a target price of 220,000 won. The report analyzed that "with even growth expected across business divisions in the second half, dividend-centered shareholder returns are expected to serve as the main momentum." In its June 10 report titled "A Virtuous Cycle of Earnings Growth and Shareholder Returns," LS Securities maintained a target price of 230,000 won for KT&G, seeing about 25% upside potential from the current share price.
