[Click eStock] "Lotte Chilsung Q4 'Earnings Surprise'... This Year Looks Even Better"

[Asia Economy Reporter Myunghwan Lee] Shinhan Financial Investment stated on the 8th that it expects Lotte Chilsung's performance to improve this year, maintaining a buy rating and raising the target price by 17% from the previous 180,000 KRW to 210,000 KRW.

Lotte Chilsung's sales and operating profit in the fourth quarter of last year were 599.6 billion KRW and 18.9 billion KRW, respectively. Compared to the previous year, sales surged by 18.2% and operating profit soared by 469.2%, significantly exceeding market expectations.

Shinhan Financial Investment analyzed that Lotte Chilsung achieved high operating profits in both the alcoholic beverages and beverage sectors. The alcoholic beverages segment, which was initially expected to turn to a loss due to one-time labor cost payments, instead grew by 151%. This was due to internal efforts such as improving utilization rates through the integration of soju factories, as well as the recovery of entertainment channels following the transition to the With-Corona phase. The beverage segment saw operating profit increase by 230% thanks to strong sales in the high-margin carbonated category.

Thanks to the favorable environment, Shinhan Financial Investment believes that even better performance can be achieved this year. The company forecasts this year's operating profit to grow by 18.1% from last year to 215.2 billion KRW. Researcher Sanghoon Cho of Shinhan Financial Investment said, "The beverage segment plans to launch functional products, expand the zero-carbonated product line, and release new products that align with consumer trends this year as well," adding, "The alcoholic beverages division, which succeeded in turning a profit last year, is expected to see the beer business turn profitable for the first time this year."

Researcher Cho continued, "The current stock price is trading at about a 30% discount compared to competitors, reflecting an overly negative view of the beer business," and emphasized, "Unlike in the past, efforts to actively change should be reflected in the valuation."

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