Lotte Holdings Reports Q2 Earnings Exceeding Expectations... A Buying Opportunity at the Low Point

[Asia Economy Reporter Park Jihwan] Hanwha Investment & Securities maintained its 'Buy' rating and target price of 43,000 KRW for Lotte Holdings on the 22nd, stating that the possibility of gradual earnings improvement is increasing.

Nam Seonghyun, a researcher at Hanwha Investment & Securities, explained, "Lotte Holdings' second-quarter earnings exceeded the company's estimates," adding, "Second-quarter sales were 2.0892 trillion KRW and operating profit was 47.6 billion KRW, down 7.3% and 12.8% year-on-year respectively, but operating profit greatly surpassed the estimated 25.4 billion KRW."

Researcher Nam analyzed, "Despite the sluggish business environment due to COVID-19, Lotte GRS reduced its deficit, Lotte Information & Communication posted solid results, and Seven Eleven turned to operating profit."

He evaluated, "There is a high possibility of improved performance for Seven Eleven due to profitability improvement from the closure of major Lotte Shopping stores and increased demand at the franchise headquarters," adding, "Gradual earnings improvement is expected from the effects of Lotte Chemical's Daesan plant operation and the inclusion of Lotte Food's consolidated earnings."

Researcher Nam added, "Although the business environment is negative due to COVID-19, earnings improvement is expected, so we recommend buying at the low point."

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