[Click eStock] Lotte Holdings Exceeds Expectations

Lotte Data Communication·Seven Eleven 'Hold Their Ground'
Possibility of Lotte Chemical's Future Recovery Increases

[Asia Economy Reporter Minwoo Lee] Lotte Holdings' second-quarter earnings exceeded expectations. Despite the impact of the novel coronavirus disease (COVID-19), strong performances from Lotte Information & Communication and Seven Eleven, as well as gains from acquiring shares in Lotte Food outside of operating income, contributed to the positive results.

On the 21st, Hanwha Investment & Securities maintained a 'Buy' rating and a target price of 43,000 KRW for Lotte Holdings for these reasons. Lotte Holdings recorded sales of 2.0892 trillion KRW and an operating profit of 47.6 billion KRW in the second quarter of this year. Although these figures represent decreases of 7.3% and 12.8% respectively compared to the same period last year, they far exceeded Hanwha Investment & Securities' operating profit forecast of 25.4 billion KRW.

Nam Seong-hyun, a researcher at Hanwha Investment & Securities, explained, "The deficit at Lotte GRS narrowed, and Lotte Information & Communication's performance held up well. Seven Eleven also turned a profit, and the bargain purchase gains from acquiring shares in Lotte Food increased other income by about 50 billion KRW, which was also effective." However, equity-method losses recorded a deficit of 11.6 billion KRW for the second consecutive quarter.

Performance is expected to gradually improve going forward. Researcher Nam predicted, "Profitability is expected to improve due to the closure of major stores at Lotte Shopping, and the demand increase at the franchise headquarters raises the possibility of improved performance at Seven Eleven. This is because growth is anticipated from the operation of Lotte Chemical's Daesan plant and the consolidation of Lotte Food's financial results."

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