Operating Margin - KT&G Corp (KRX:033780)

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Price: 150 000 KRW 4.9%

Market Cap: 15.9T KRW

20.3%

Current

21%

Average

10.9%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

20.3%

Operating Profit

1.3T

Revenue

6.2T

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
KR		KT&G Corp KRX:033780	16.2T KRW	20%
US		Philip Morris International Inc NYSE:PM	246.7B USD	39%
UK		British American Tobacco PLC LSE:BATS	93.9B GBP	14%
US		Altria Group Inc NYSE:MO	99.6B USD	52%
JP		Japan Tobacco Inc TSE:2914	10.3T JPY	13%
IN		ITC Ltd NSE:ITC	5T INR	29%
UK		Imperial Brands PLC LSE:IMB	25.6B GBP	11%
SE	S	Swedish Match AB F:SWMC	15.2B EUR	41%
CN		Smoore International Holdings Ltd HKEX:6969	75.3B HKD	13%
ID		Hanjaya Mandala Sampoerna Tbk PT IDX:HMSP	84.9T IDR	8%
IN		Godfrey Phillips India Ltd NSE:GODFRYPHLP	446.9B INR	17%

KT&G Corp
Glance View

Economic Moat

None

Market Cap

16.2T KRW

Industry

Tobacco

KT&G Corp., an acronym for Korea Tobacco & Ginseng Corporation, is a unique entity in the global business landscape, epitomizing a fascinating blend of tradition and modernity. Born in South Korea, KT&G has transcended its origins to become a formidable player in both the tobacco and health supplement industries. Its roots stretch back to 1899 when it began as a state-run monopoly in Korea focusing on tobacco. Over the decades, it has successfully evolved, strategically privatizing its operations in 2002. Today, KT&G is a publicly traded company that has successfully diversified its portfolio by expanding into the fields of cosmetics and biotechnology, though tobacco and ginseng remain its flagship products. Its prowess lies in understanding the delicate balance between sectors that are not typically seen together: the addictive allure of tobacco and the wellness attributes of Korean ginseng. The financial engine of KT&G is primarily fueled by its tobacco division, which produces a vast array of cigarette brands that cater to varying consumer preferences across the globe. This segment is a powerhouse, with products that are distributed in over 50 countries, ensuring a steady stream of revenue. On the other hand, the ginseng business is another pillar of KT&G's economic structure, driven by the growing global demand for natural health supplements, including its renowned CheongKwanJang brand, which has become synonymous with quality and reliability in ginseng products. This dual approach enables KT&G to mitigate risks associated with each industry's specific challenges, creating a robust and diversified revenue model. It's a strategic maneuver allowing KT&G to capitalize on the burgeoning wellness trend while maintaining its dominant position in the tobacco market.

View KT&G Corp Analysis

Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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KT&G Corp
KRX:033780