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KT&G draws global investors' attention amid record tobacco sales
KT&G's top tobacco brand, ESSE, is showcased at 2024 TFWA World in Cannes, France, from Sept. 30 to Oct. 3, 2024. Courtesy of KT&G
By Ko Dong-hwan
BlackRock, Capital Group increase holdings in Korean tobacco firm
Tobacco company KT&G is drawing global investors’ attentions as its first-quarter overseas sales reached a record high, while its shareholder-friendly dividend policy also continued to gain favorable reviews.
The company said Sunday that Capital Group, one of the world’s largest global asset management firms, earlier this month acquired a 5.61 percent stake in KT&G through its subsidiary, Capital Research and Management Company. This development came just four months after BlackRock, the world’s largest asset manager, secured more than a 5 percent stake in KT&G in January.
KT&G has recently seen a steady increase in foreign ownership. Foreign investors posted net purchases for 22 consecutive trading days from April 9 through Tuesday. During this period, they acquired more than 1.03 million shares, raising their ownership stake by 0.96 percentage point. As of Tuesday, the number of foreign-held KT&G shares had increased 3 percent from the beginning of the year.
Given that Korea’s stock market is concentrated on the semiconductor sector, continued foreign investment in KT&G shares reflects that investors are favoring a value-investment strategy based on the company’s mid- to long-term fundamentals and shareholder return policy.
“The fact that BlackRock and Capital Group have increased their stakes to the 5 percent range and that foreign buying pressure has continued for 22 consecutive trading days is a signal indicating that, beyond mere capital inflow, value-investment funds with a long-term perspective are now flowing in earnest,” a company official said.
KT&G’s stock price has also been on the rise. Shares, which traded in the 140,000 won ($93) range in January, are now hovering in the 180,000 won range, maintaining upward momentum on the back of strong first-quarter earnings, a high dividend payout ratio and plans for treasury share cancellations.
KT&G in the first quarter posted 1.7 trillion won in sales and an operating profit of 365 billion won, jumping 14.3 percent and 27.6 percent from the previous year, respectively. Its performance was boosted by overseas businesses. Tobacco sales in the company’s global markets posted 560 billion won, the highest-ever quarterly figure and a jump of 24.6 percent from last year. Operating profit for the company's overseas businesses jumped 56.1 percent.
Shareholder return policy is also shifting to offer greater benefits. Already reaching its shareholder return goal of 3.7 trillion won from 2024 to 2027, the company announced it will present a new policy in the second half of this year.
Following a revision of the country’s Commercial Act in July 2025, KT&G pledged to cancel all of its treasury shares, a first for a Korean firm. The company’s future shareholder return policy is expected to cater to its shareholders to a greater extent.
“The overseas capital market evaluates KT&G as an attractive investment destination based on competitiveness of its core business, shareholder returns and activities to enhance shareholder value,” the official said.