Oct. 19 (Bloomberg) -- Jinro Ltd., South Korea’s biggest maker of the traditional liquor soju, rose in its trading debut on the Korea Exchange after the stock was recommended by Daewoo Securities Co., Credit Suisse Group AG and Morgan Stanley.

The stock closed at 42,450 won in Seoul, higher than the initial share sale price of 41,000 won, after falling as low as 40,100 won earlier. The benchmark Kospi index rose 0.5 percent.

Daewoo Securities ratedJinro “buy” with a share-price estimate of 50,000 won, citing its ability to generate a “stable” cash flow, in a report dated Oct. 16. Credit Suisse rated the stock “outperform,” citing cash flow, dividend potential, asset sales and “synergies” with Hite Brewery Co. The company was also rated “overweight” at Morgan Stanley.

“In the defensive soju market, Jinro has long-held dominance and its market share is around 50 percent plus,” Credit Suisse analysts Sonia Kim and Soyeon Hong wrote in a report today. “As the market is relatively mature, we don’t expect an intense competition in the mid-to-long term.”

Soju consumption may increase 1.5 percent annually over the next five years, aided by growing popularity among female drinkers of lower-alcohol products, wrote Baek Woon Mok, a Daewoo analyst.

“The IPO price seems cheap, and therefore we bought some today,” said Jang Hee Jun, a fund manager at KTB Asset Management Co. in Seoul, which manages the equivalent to $8.5 billion in assets, adding that “Jinro’s Japan business has a growth potential.”

Half Market

Samsung Securities Co. and Woori Investment & Securities Co. managed the sale of 14.4 million existing shares. The selling price was lower than a marketed range of between 45,000 won and 50,000 won.

Jinro, which controls about half the market, aims to increase annual sales 36 percent to 1 trillion won ($850 million) by 2015 from 735.3 billion won last year, the company said Sept. 10. It also plans to increase its market share to 60 percent by 2015.

The market for soju, a clear liquor distilled from potatoes and grains, grew to 2.9 trillion won last year from 1.8 trillion won in 2001, according to Jinro.

The company said on Sept. 10 that it may buy back and cancel shares after the listing and pay out 50 percent of net income in dividends.

Hite Holdings Co., Jinro’s largest shareholder, was unchanged at 33,250 won. Hite Brewery Co., South Korea’s biggest beer maker, gained 0.6 percent to 169,000 won. Hite Holdings is also the biggest shareholder of Hite Brewery.

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net

Last Updated: October 19, 2009 04:03 EDT