[Click eStock] "Lotte Chilsung, Surprise in Both Beverage and Alcohol Divisions"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 240,000 KRW for Lotte Chilsung on the 3rd, expecting strong earnings that will exceed market expectations in the second quarter as well.

Consolidated sales and operating profit for the first quarter were 623.6 billion KRW and 59.7 billion KRW, respectively, recording increases of 16.2% and 84.9% compared to the same period last year, surpassing market expectations.

Beverage sales increased by 12.1% year-on-year, and operating profit rose by 47.2% to 32.8 billion KRW. Volume grew by 5%, with price increases estimated to have contributed 3%. Carbonated beverage sales also increased by 18% compared to the previous year, showing an effect of mix improvement.

Alcohol sales increased by 2.1%, and operating profit surged by 133.5% to 21.6 billion KRW. The low base last year, combined with pre-price hike demand for soju and beer, positively impacted the results. Soju and beer sales increased by 19.9% and 14.8%, respectively, while wine grew by 27.8%. Beer OEM sales slightly decreased compared to the previous quarter due to the off-season effect.

Estimated sales and operating profit for this year are 2.7575 trillion KRW and 248.3 billion KRW, respectively, representing increases of 10% and 33.8% compared to the same period last year. Operating profit is expected to comfortably exceed the market forecast of 220 billion KRW.

Researcher Eunju Shim of Hana Financial Investment said, “Beverages will continue to benefit from price increases and mix improvement effects driven by strong new product sales,” adding, “Alcohol will see a full-scale leverage effect as total demand recovers gradually in the second half.” According to the industry, the first-quarter alcohol entertainment market has recovered to 60% and 80% of pre-COVID-19 levels in office worker and youth districts, respectively.

Researcher Shim added, “From this month, when outdoor mask-wearing was lifted, total alcohol demand is expected to increase rapidly,” and “Strong earnings exceeding market expectations are anticipated in the second quarter as well, following the first quarter.”

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