[Click e Stocks] "Lotte Shopping, No Factors for Short-Term Stock Price Rebound"

[Asia Economy Reporter Song Hwajeong] Meritz Securities evaluated Lotte Shopping on the 5th, stating that due to repeated one-off issues and high earnings volatility, there are no short-term factors for a stock price rebound, maintaining a 'Hold' investment rating and a target price of 117,000 KRW.

Lotte Shopping's Q3 earnings this year fell short of market expectations. On a consolidated basis for Q3, total sales amounted to 5.375 trillion KRW, a 0.3% decrease compared to the same period last year, and operating profit was 29 billion KRW, down 73.9%. Yoonhee Choi, a researcher at Meritz Securities, said, "Excluding Culture Works, profit declines were observed across all business segments, significantly missing market expectations."

The department store segment saw total sales increase by 7.5% to 1.791 trillion KRW but recorded an operating loss of 21 billion KRW, turning to a deficit. Researcher Choi analyzed, "Structural growth in luxury and sports led existing store growth (7.0%), but one-off costs related to voluntary retirement prevented avoiding losses." Discount stores had total sales of 1.615 trillion KRW, down 8.6%, and supermarkets decreased by 18.6% to 397 billion KRW. The exclusion of disaster relief fund usage led to a decline in existing store sales, resulting in poor performance. Hi-Mart's total sales increased by 1.7% to 1.102 trillion KRW, but operating profit fell 9.0% to 50.9 billion KRW due to a decline in the sales proportion of high-margin white goods, worsening the product mix. Home shopping sales grew 4.7%, but profits decreased by 20% due to increased transmission fee burdens, which lowered margin rates. Culture Works recorded a 19.7% growth in total sales due to a recovery in attendance from major foreign currency releases, improving operating losses by 1.2 billion KRW.

Repeated one-off issues and high earnings volatility are hampering the stock price. Researcher Choi stated, "With the removal of COVID-19 special factors next year, the burden of a low base effect in major business segments remains, and increasing quarterly earnings volatility is dampening investor sentiment," adding, "If repeated one-off cost issues ease, a re-rating of the rising earnings strength will be possible."

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