KT&G stock soars to record high

KT&G CI

South Korean tobacco company KT&G Corp. saw its stock price surge on early Friday due to its strong third quarter performance and positive responses to its “surprise” shareholder return policy.

KT&G shares were trading at 119,900 won ($86.45) as of 9:11 a.m., up 12,000 won or 11.12 percent from the previous day. The stock also hit a new 52-week high of 123,000 won, up 13.99 percent during intraday trading.

KT&G announced on Thursday that its third-quarter 2024 sales totaled 1.64 trillion won, with an operating profit of 415.7 billion won, exceeding the market forecast of 380.6 billion won by 9.2 percent. The company unveiled plans to buy back and retire 1.3 trillion won worth of its shares and distribute 2.4 trillion won in dividends by 2027. It also aims to enhance shareholder value through the restructuring of non-core assets such as real estate and financial assets and raise its return on equity (ROE) to around 15 percent.

“KT&G has been undervalued compared to global peers due to its conservative management strategy and cash utilization,” Shinhan Securities Co. analyst Sang-hoon Cho said. “Going forward, aggressive management strategies and capital expenditures (CapEx) will lead to a virtuous cycle with strong shareholder return policies, supporting the stock’s performance.”

Meanwhile, secondary battery stocks, which had been weak after former President Donald Trump’s win in the latest U.S. presidential election, rebounded in early trading on Friday.

Shares of LG Energy Solution Ltd. traded at 401,500 won as of 9:34 a.m., up 4.02 percent from the previous day, breaking a three-day losing streak.

LG Energy Solution announced before the market opened that its Arizona subsidiary had signed a contract to supply next-generation cylindrical batteries to U.S. electric vehicle maker Rivian Automotive Inc. The contract involves supplying 67 gigawatt hours (GWh) of 4695 cylindrical batteries over five years, with estimated revenue exceeding 8 trillion won if cell prices are assumed at $100 per kWh.

Other secondary battery stocks also showed gains, with POSCO Future M Co. up 3.32 percent, LG Chem Ltd. up 1.64 percent, and Samsung SDI Co. up 0.69 percent. In the secondary Kosdaq market, shares of EcoPro BM Co. and EcoPro Co. both gained 4.02 percent and 4.07 percent respectively.

Mirae Asset Securities Co. analyst Kim Chul-joong predicted in a report on Friday that “under the circumstances of lowered U.S. demand forecasts and increased uncertainty over subsidies for expansion, junior players‘ aggressive market entry may be limited, and key selling price indicators may form a bottom earlier than expected.”

He also suggested that rising uncertainty regarding tariffs could limit the overseas expansion plans of Chinese battery and materials firms, creating opportunities for Korean battery materials companies.

In other market news, Airrane Co. saw a sharp decline of over 30 percent on its first day of trading on the Kosdaq market on Friday.

Airrane shares were trading at 16,060 won as of 9:09 a.m., down 30.17 percent from its initial public offering (IPO) price of 23,000 won. The company is the only Korean firm specializing in gas separation membrane solutions and has its proprietary technology to separate gases such as nitrogen, methane, and carbon dioxide.

It had set a high IPO price at 23,000 won after exceeding the upper end of the desired range (18,500 won) during the earlier demand forecast for institutional investors. The company went on to record a competition ratio of 418.31 to 1 and raised 1.442 trillion won in deposits in the subsequent public subscription.

For its part, TheBorn Korea Inc.’s stock declined by over 6 percent on its third day of trading on the main Kospi on Friday. The stock was trading at 48,300 won as of 9:40 a.m., down 6.58 percent from the previous day.

After an initial jump of 51.18 percent above its IPO price of 34,000 won on its first day, the stock continued to rise slightly by 0.58 percent the following day but turned downward on Friday.

Hanwha Investment & Securities Co. analyst Han Yu-jeong noted that although TheBorn Korea has presented overseas market expansion as a future growth driver, meaningful overseas revenue might take at least 2 to 3 years to materialize.

Shares of Krafton Inc. also dropped over 6 percent in early trading on Friday despite its strong results for the third quarter of 2024.

Krafton shares were trading at 327,500 won as of 9:40 a.m., down 6.70 percent from the previous day. The stock initially opened 2.99 percent lower and at one point fell by as much as 7.98 percent to 323,000 won.

Krafton announced on Thursday that its third-quarter consolidated operating profit increased 71.4 percent on year to 324.4 billion won. The gain was 27.3 percent higher than the market consensus of 254.8 billion won compiled by Yonhap Infomax.

In response, brokerages raised their price targets for Krafton, noting the company’s potential for continued growth. However, the stock price fell in early trading on Friday as investors took profits on the strong results.