Flashlight Capital Partners Acquires Stake in Korean Tobacco Group, Focuses on HNB Products

Singapore-based investment firm Flashlight Capital Partners has acquired approximately 1% of shares in South Korea's Tobacco Group. The firm is actively driving the company's HNB (Heat-not-Burn) product business, with the aim of divesting its ginseng business and focusing solely on smokeless tobacco alternatives. This move is in line with a shareholder's call for the company to generate at least half of its total tobacco revenue from heated tobacco products by 2027.

The investment firm also hopes that KT&G will separate its ginseng business from its core tobacco business in order to unlock the former's value and expand globally. In a letter to KT&G shareholders, Flashlight Capital wrote, "From our perspective, it is illogical for the ginseng business to fall under the tobacco company." The investment firm is pushing for KT&G to divest from its non-core businesses such as real estate development. It also hopes for the company to double the size of its share repurchase program and improve environmental, social, and corporate governance issues.

According to Flashlight Capital, despite a recent increase, the stock price of the company is approaching levels seen 15 years ago. This indicates that the stock price of KT&G is lower compared to its industry peers and the overall market.

According to FactSet, KT&G, formerly known as the Korea Tobacco & Ginseng Corporation, is one of South Korea's largest tobacco retailers with a market capitalization of approximately $8.5 billion.

The company was established in 1883 as a state-owned tobacco manufacturer and was privatized in 2002. KT&G is now an international company with sales reaching $3.6 billion. A spokesperson for KT&G stated that the company has always maintained close communication with its shareholders and values their relevant comments. The spokesperson added, "We will continue to strive to maximize shareholder value through the implementation of shareholder return policies.

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