[Click eStock] "Lotte Chilsung to Achieve Profit Improvement Next Year Mainly in Alcoholic Beverage Sector"

[Asia Economy Reporter Eunmo Koo] Lotte Chilsung is expected to improve profits next year, mainly in the alcoholic beverage sector, compensating for this year's poor performance.

Despite the sluggish stock prices in the food and beverage industry in the second half of the year, Lotte Chilsung's stock price rose about 20% from its low point in November. Since the alcoholic beverage sector turned profitable in the third quarter, the stock price has shown a steady trend. The market is anticipating growth next year due to a base effect and recovery of the core business following this year's weak performance.

On the 9th, Hyemi Kim, a researcher at Cape Investment & Securities, stated in a report, "The main driver of expectations for next year is profit improvement through cost efficiency in the alcoholic beverage sector," adding, "Sales are recovering from the negative growth caused by the boycott of Japanese products in the second half of last year, and new products such as Cloud Saeng Draft are showing strong sales."

She also noted, "Changes in tax laws and regulations within the alcoholic beverage market have increased the possibility of OEM production for imported and craft beers, and with rising operating rates, fixed cost coverage will accelerate." Furthermore, she predicted, "Considering Lotte Chilsung's brand power and the characteristics of major channels, sales recovery in the beverage sector will accelerate once the COVID-19 pandemic eases."

Lotte Chilsung is also expected to strengthen its position as a key affiliate within the group. In the third quarter, Lotte Chilsung conducted a third-party allotment paid-in capital increase targeting Lotte Holdings. Researcher Kim explained, "Lotte Holdings contributed its shares in overseas subsidiaries Pepsi-Cola Philippines (72.89% stake) and Lotte Liquor Japan (100% stake) as non-cash contributions to acquire new shares in Lotte Chilsung. This will not only improve management efficiency but also strengthen Lotte Holdings' control over Lotte Chilsung."

This content was produced with the assistance of AI translation services.