[Click eStock] "Lotte Chilsung Expects Strong Performance in Both Beverage and Alcohol Divisions"

NH Investment & Securities Report

[Asia Economy Reporter Minji Lee] NH Investment & Securities stated on the 24th that Lotte Chilsung is expected to record favorable performance in both the beverage and liquor sectors, maintaining a buy rating and a target price of 205,000 KRW.

Recently, the food and beverage industry has generally raised concerns about rising costs. In the case of Lotte Chilsung, it is analyzed that there is no direct exposure to grains such as wheat and barley, which have seen particularly large price increases. Additionally, the company is reducing the burden of rising raw material costs through product price increases, mix improvements, and restructuring efforts, and sales growth is also expected due to progressive recovery of daily life.

For the first quarter, the company's consolidated sales are expected to reach 596.2 billion KRW, and operating profit 43.8 billion KRW, representing growth of 10.7% and 35.6% respectively compared to the same period last year. The beverage sector is expected to achieve sales of 384.6 billion KRW and operating profit of 25.2 billion KRW, growing 11.2% and 12.8% year-on-year. Considering consumer trends, strong sales of zero-carbonated and label-free bottled water products launched last year are expected to drive continued high growth in carbonated drinks (14%) and bottled water (12%), leading overall performance improvement. The growth of high-margin products and the effect of price increases are also expected to be gradually reflected, resulting in a larger improvement in operating profit compared to sales.

The liquor sector is expected to record sales of 108 billion KRW and operating profit of 18.2 billion KRW, increasing 12% and 95% respectively year-on-year. Operating profit is expected to increase significantly compared to the previous year due to strong sales across all product categories, including general beer (10%) and high-margin wine (20%).

Jomi Jin, a researcher at NH Investment & Securities, said, “In the liquor sector, the price increase for soju has been implemented, and since competitors have also decided to raise beer prices, there is a possibility of changes in pricing policy. The beverage sector is positive as it continues strong sales momentum through product development and launches that align with changing consumer trends, and expectations for the development of the Seocho-dong site remain valid.”

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