KT&G is a company in which tobacco accounts for about 67.8% of first-quarter 2026 consolidated revenue of ₩1.7036 trillion, its core business, with health functional foods centered on the Jung Kwan Jang ginseng brand and real estate added on. Its structure layers overseas cigarettes as a growth axis on top of stable domestic tobacco and red ginseng. First-quarter overseas cigarette revenue of ₩559.6 billion and a 27.7% rise in operating profit confirmed the earnings improvement, and it executed a strong shareholder return by completing the full retirement of 10,866,189 treasury shares, about 9.5% of shares outstanding. What stands out lately is that the stable cash-generating power of domestic tobacco, the profit growth of overseas cigarettes, a 3.6% dividend, share retirements, and a solid balance sheet with a 52% debt ratio are strengths, while the structural decline in the smoking population, regulatory and tax changes, and the exchange-rate and local-pricing variables of overseas cigarettes are points to watch.
At-a-glance assessment financial health · growth · profitability · valuation
- Debt ratio, current ratio and interest burden all look healthy.
- Revenue rose 11.3% year over year, and the pace is quickening (3-year trend: rising).
- Most recent quarter (Q1 2026) revenue was 14.2% higher than a year earlier.
- ROE is 11.8% (controlling-interest basis). It is above the sector average.
- Operating margin is 20.4%.
- P/B is high versus peers, a stretch on an asset basis.
Ownership & governance As of 2025-12-31
Largest shareholder Industrial Bank of Korea 8.06% (corporate)
Controlling bloc incl. related parties 8.06%
With the controlling bloc holding 8%, ownership is dispersed, leaving room for control-related or activist dynamics.
🔎 In-depth analysis
- KT&G is a company whose 'money-making structure' is relatively clear.
- On a first-quarter 2026 basis, of consolidated revenue of ₩1.7036 trillion, tobacco is the core at about 67.8% (₩1.1559 trillion), followed by health functional foods centered on the Jung Kwan Jang brand run by subsidiary KGC (Korea Ginseng Corporation) at 19.5% (₩332.6 billion), real estate at 6.9% (₩116.9 billion), and other items such as pharmaceuticals and cosmetics at 5.8%.
- Tobacco holds a near-monopoly position in the domestic market, and more recently overseas cigarette exports have emerged as a growth engine.
- First-quarter overseas cigarette revenue was ₩559.6 billion; with strategic price increases and cost efficiencies overlapping, profit in the overseas cigarette segment rose sharply.
- In short, it is apt to understand it as a structure that adds an 'overseas cigarette' growth axis on top of a defensive base of 'stable domestic tobacco plus red ginseng.'
- The recent closing price is ₩176,400 and the market cap is ₩18.3 trillion.
- The price sits below its 20-day line (₩176,860) and below its 60-day line (₩177,802).
- Being below both short- and medium-term moving averages, the trend looks subdued.
- The RSI (a gauge that compares upward and downward strength over the last 14 days on a 0–100 scale) is 49.5, a neutral level.
- The price is down 4.7% over one month and up 14.0% over three months, and sits 6.7% below its 52-week high.
- Relative strength versus the KOSPI is 46 (1–99, a measure of return versus the index over the past year weighted toward recent performance; higher means stronger than the market).
- That places it in roughly the top 54% of all stocks by strength.
- Over the past three months it lagged the index by 10.4%.
- Chart readings are best viewed alongside trading volume and disclosure dates.
- On valuation, the P/E is 16.80x and the P/B is 1.97x.
- That said, this P/E is based on last year's (2025) confirmed earnings, and 2025 net profit was a 'depressed' figure of ₩1.09 trillion, down 6.5% from the prior year.
- With earnings rising again in 2026, the P/E on last year's basis should be read with the awareness that it looks somewhat higher than the actual burden.
- Profitability is solid.
- ROE (how much a company earns in a year on its equity) is 11.8%, the operating margin is 20.4%, and the net margin is 16.6% — good for a consumer-goods company.
- The balance sheet is very sturdy, with a low debt ratio of 52.3%, a current ratio of 217%, and an interest-coverage ratio of 12.2x, leaving ample debt-servicing capacity.
- The dividend yield is 3.6% (a per-share dividend of ₩6,000) and the payout ratio is 57.6%, a relatively high intensity of shareholder returns.
- The top line is growing steadily.
- Revenue rose from ₩5.8626 trillion in 2023 to ₩6.5797 trillion in 2025, and the 2025 revenue growth rate of 11.3% accelerated from the prior year (0.8%).
- Operating profit also rose 13.0% to ₩1.3437 trillion in 2025.
- Only net profit fell 6.5% in 2025, and that is largely a base effect from a large one-off gain in 2024.
- The flow turned distinctly better in 2026.
- First-quarter cumulative revenue rose 14.3%, operating profit 27.7%, and net profit 46.7%, with overseas cigarette profit jumping in particular and earnings leverage kicking in in earnest.
- If this trend is carried conservatively into the full year rather than treated as a single quarter, there is room for operating profit to rise to the low ₩1.7 trillion range and net profit to the mid-₩1.3 trillion range this year.
- In that case, even if the P/E on last year's basis looks close to 16x, on this year's expected earnings it comes down to about 13x, so it is hard to call it expensive on last year's numbers alone.
- The grounds for growth are clear.
- Overseas cigarettes see margins rise structurally as price increases and new-market penetration work at the same time, and Jung Kwan Jang red ginseng has entered a recovery trend.
- The core of recent disclosures is twofold.
- First, on May 7, 2026, a fair disclosure of preliminary first-quarter results (operating profit up 27.7%) confirmed the earnings improvement.
- Second, the company decided to fully retire 10,866,189 treasury shares (about 9.5% of shares outstanding) and completed the retirement in April, a strong shareholder-return measure that directly lifts per-share value.
- Separately, on May 12 a business suspension at some subsidiaries was disclosed, but its weight relative to the main business is not large, so the effect on company-wide results is limited.
- Entering June, brief large-holding change reports followed, and periodic disclosures such as the quarterly report and corporate governance report were filed normally.
- The strong conditions are clear.
- The stable cash-generating power of domestic tobacco, the structural profit growth of overseas cigarettes, the recovery of Jung Kwan Jang red ginseng, and active shareholder returns — a 3.6% dividend and the retirement of shares on the scale of 9.5% — support it at the same time.
- The balance sheet is also very solid at a 52% debt ratio, making it resilient to external shocks.
- Conversely, the weakening conditions are the structural decline in the smoking population, tobacco-related regulatory and tax changes, and the exchange-rate and local-pricing variables of overseas cigarettes.
- Although the P/E on last year's basis looks burdensome near 16x, a balanced judgment requires also seeing that, as this year's earnings rise, it comes down to around 13x on an expected basis.
- In sum, from a viewpoint that wants defensive cash flow and high shareholder returns, the strengths stand out, while from a viewpoint that emphasizes the long-term decline in tobacco demand and regulatory risk, caution is warranted.
🔎 Valuation vs peers Undervalued
The peer set is built from Korea's representative defensive consumer staples (food and beverage) and domestic-brand consumer goods. Because tobacco is effectively a monopoly, direct peers are few, so it is compared against companies with a similar character of domestic cash generation and dividends.
| Peer | P/E | P/B | ROE |
|---|---|---|---|
| Lotte Wellfood | 12.97x | 0.43x | 3.30% |
| Lotte Chilsung Beverage | 19.51x | 0.61x | 3.10% |
| Samyang Foods | 21.34x | 6.62x | 31.02% |
Versus the peer set, ROE (11.8%) is upper-middle — higher than Lotte Wellfood and Lotte Chilsung (in the 3% range) and lower than Samyang Foods (31%) — and its earnings stability and dividend intensity are superior. The P/E of 15.9x on last year's basis is mid-range within the peer set, but it has the limitation of resting on 2025 net profit depressed by a one-off base. Reflecting the near-28% rise in first-quarter 2026 operating profit as an earnings inflection, the P/E on this year's expected basis comes down to about 13x, to which the per-share-value enhancement from retiring 9.5% of shares and the 3.6% dividend are added. On last year's numbers alone it is at a fair level, but viewing rising this-year earnings and strong shareholder returns together, we judge the current price to be in somewhat undervalued territory.
Price history Close · MA20 · MA60
The latest close is ₩176,400 and the market capitalization is ₩18.3 trillion. The price sits below its 20-day moving average (₩176,860) and below its 60-day moving average (₩177,802). It is under both its short- and medium-term moving averages, so the trend looks subdued. The RSI (a supplementary indicator that gauges the strength of gains versus losses over the past 14 days on a 0-100 scale) is 49.5, a neutral level. The one-month change is -4.7%, the three-month change is +14.0%, and the position relative to the 52-week high is -6.7%. Relative strength versus the KOSPI is 46 (on a 1-99 scale, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market). It is stronger than roughly 46% of all stocks. Over the past three months it lagged the index by 10.4%. Chart interpretation is best done alongside trading volume and the dates on which disclosures occur.
Relative performance stock vs index · start = 100
Excess return vs index · 3M -10.37% / 6M -23.23% / 12M -41.29%
Key metrics vs whole-market median
Valuation
The P/E of 16.80x is above the whole-market median (13.81x). The P/B of 1.97x is above the whole-market median (1.15x).
Enterprise value (EV)
EV = market cap + net debt. It reflects cash and debt, so it captures the real cost of the whole business that market cap alone misses; lower multiples are cheaper relative to earnings or sales.
Intrinsic value (DCF estimate)
DCF (discounted cash flow) estimate — discount rate 9.2%, initial growth 10.0%→terminal 2.0%, 10-yr forecast, earnings-based. A reference range that shifts materially with assumptions.
Profitability & financials
Return on equity (ROE) is 11.8%, above the whole-market average (5.0%). The operating margin is 20.4%. The debt ratio is 52.3%, so the financial structure is stable.
Growth FY2025 · annual report (consolidated)
| Item | 2023 | 2024 | 2025 | YoY |
|---|---|---|---|---|
| Revenue | $3.9B | $3.9B | $4.4B | +11.35% ↑ faster |
| Operating profit | $773.7M | $787.9M | $890.5M | +13.03% ↑ faster |
| Net profit | $598.3M | $772.6M | $722.5M | -6.49% ↓ slower |
| 5-year | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $3.5B | $3.9B | $3.9B | $3.9B | $4.4B |
| Operating profit | $887.0M | $840.2M | $773.7M | $787.9M | $890.5M |
| Net profit | $647.7M | $673.2M | $598.3M | $772.6M | $722.5M |
| Revenue CAGR | 4-yr avg 5.92% | ||||
Revenue rose 11.3% year over year (2023 ₩5.9 trillion → 2024 ₩5.9 trillion → 2025 ₩6.6 trillion), and the three-year trend is 'rising'. The pace of growth also quickened from the prior year. Operating profit rose 13.0% year over year. Profit is growing at an accelerating pace. Over the 5 years on record, revenue compound annual growth (CAGR) is 5.9%. The two-year revenue CAGR is 5.9%. In the most recent quarter (Q1 2026), revenue was 14.2% higher than the same period a year earlier.
Latest quarterly results Q1 2026 · vs year-ago
Technical indicators
What stands out
- The dividend yield, at 3.4%, is on the high side.
- ROE of 11.8% points to solid profitability.
- Revenue grew 11.3% year over year, a sign of growth.
- The balance sheet is stable in terms of debt and liquidity.
Points to watch
- The price is high versus peers, so expectations already appear priced in.
Recent news & events searched · sourced
- 2026-05-07EarningsQ1 2026 preliminary consolidated results — revenue of ₩1.7036 trillion (+14.3%), operating profit of ₩364.5 billion (+27.7%), net profit of ₩378.2 billion (+46.7%). Overseas cigarette strength drove the earnings improvement.Short term: an earnings inflection confirmed, favorable for fundamentals. Medium term: if overseas cigarette margin improvement continues, the full-year earnings level could rise. Source
- 2026-05-15FilingQ1 2026 quarterly report filed — includes the segment mix of tobacco 67.8%, health functional foods 19.5%, and real estate 6.9%, plus details of the full retirement of 9.5% of treasury shares (completed April 23).Short term: confirms the scale of shareholder returns. Medium term: the per-share earnings and asset-value enhancement from the retirement feeds into the valuation. Source
- 2026-05-12UpdateDisclosure of a key management matter at a subsidiary (business suspension) — a business suspension at the level of some subsidiaries. Its weight versus the core tobacco and red-ginseng business is limited.Short term: an effect confined to the results of the relevant subsidiary. The effect on company-wide consolidated results is small. Source
- 2026-06-09FilingReport on large holdings of stock, etc. (abbreviated) — reports of ownership changes by major shareholders. Multiple abbreviated change reports followed in June.Short term: a reference on supply and demand. The direct effect on the business and results is limited. Source
Figure cross-check computed ↔ external
| Metric | Computed | External | Status | Source |
|---|---|---|---|---|
| Q1 2026 operating profit | ₩364.5 billion(YoY +27.7%) | ₩364.5 billion(YoY +27.7%) | Confirmed | link |
| Q1 2026 segment revenue mix | 67.8%· 19.5%· 6.9%· 5.8% | 11,559· 3,326· 1,169· 981 | Confirmed | link |
| Scale of treasury-share retirement | approx. 9.5% | 10,866,189 , 2026-04-23 | Confirmed | link |
| 2026 estimated net profit (full year) | approx. 1₩350.0 billion(self-estimate) | — | Unverified | link |
Recent filings
- 2026-06-09OwnershipOwnership-change filing
- 2026-06-04OwnershipOwnership-change filing
- 2026-05-29Large-business-group status disclosure
- 2026-05-29Large-business-group status disclosure (amended)
- 2026-05-29Corporate governance report
- 2026-05-28Large-business-group status disclosure
- 2026-05-27OwnershipOwnership-change filing
- 2026-05-15PeriodicQuarterly report
- 2026-05-12Business suspension
- 2026-05-08OwnershipOwnership-change filing
- 2026-05-07Disclosure
- 2026-05-07EarningsFair-disclosure notice
📖 Plain-language glossary — expand if you are new to this
- P/E
- How many times a year's net profit the price is worth (lower is cheaper relative to earnings). The P/E here is on trailing (last full-year) results; for companies whose earnings swing fast (memory chips and other cyclicals/high-growth), a forward P/E on this year's expected earnings is more accurate.
- P/B
- Price relative to net assets (equity). Around 1x means it trades near book value; below 1x means below book.
- P/S
- Price relative to a year's revenue — useful for growth companies with thin earnings.
- Net debt / EV
- Net debt = interest-bearing debt − cash. Negative means more cash than debt (net cash). EV (enterprise value) = market cap + net debt, closer to what it would cost to buy the whole business.
- EV/EBIT · EV/EBITDA · EV/Sales
- Enterprise value against operating profit (EBIT), EBITDA, or revenue. Unlike P/E these reflect debt and cash; lower is cheaper relative to earnings power or sales.
- FCF / FCF yield
- Free cash flow = operating cash − capex, the cash actually left over. FCF yield = FCF ÷ market cap; higher means more cash generated per unit of market value.
- Intrinsic value (DCF)
- Future free cash flow (or, for some capex-heavy but profitable names, forecast earnings) discounted to today to estimate per-share value. Because it shifts a lot with the discount-rate and growth assumptions, it is shown as a bear/base/bull range, and the basis and assumptions are disclosed in one line beneath it.
- ROE
- How much profit the company earns in a year on its equity (%). Higher means better returns on capital.
- EPS / BPS
- Earnings per share / net assets (book value) per share.
- Operating / net margin
- Profit left from the core business / final profit after tax and interest, per unit of revenue.
- Debt ratio
- Debt relative to equity (%). Higher means more reliance on borrowing (norms vary by sector).
- Current ratio
- Assets convertible to cash within a year against debt due within a year. Above 100% leaves some short-term headroom.
- Interest coverage
- How many times operating profit covers the interest owed. Below 1x means operating profit alone struggles to cover interest.
- Dividend yield / payout ratio
- The year's dividend as a % of today's price / the share of earnings paid out as dividends.
- Revenue CAGR
- Multi-year growth expressed as a single yearly average (compound annual growth rate).
- RSI (short-term signal)
- Whether recent price action is overheated or beaten down. Above 70 is overbought, below 30 oversold.
- MA20 / MA60 (moving averages)
- The 20- and 60-day average price. Price above them signals a firmer short-term trend.
- vs 52-week high
- How far below the past year's peak the price sits now (%).
All figures are for reference only; how they read varies by sector and over time.
Sources: Korea FSC market-price API (data.go.kr), OpenDART, KRX/KIND — public data only.
Bong Stocks presents public-data-based information for reference only. It is not investment advice and contains no target prices, ratings, or buy/sell recommendations. Verify independently before making any decision.