[Click eStock] "Lotte Chilsung, 'Saero' Effect... Soju Market Share Rising"

NH Investment & Securities Report

NH Investment & Securities maintained a buy rating and a target price of 230,000 KRW for Lotte Chilsung on the 3rd.

The company's sales and operating profit for the first quarter were 679.8 billion KRW and 59.3 billion KRW, respectively. Sales grew 9% year-on-year, closely related to sales growth rates of 9% and 7% in the beverage and liquor sectors, respectively. In the beverage sector, the preference for zero-calorie carbonated drinks increased, and the expansion of the product portfolio outperformed the market average.

In the liquor sector, although the beer category was sluggish, the performance of Cheoeumcheoreom and Saero shone. Monthly sales of Cheoeumcheoreom Saero expanded to around 10 billion KRW, and the soju market share reached 20.4%.

Younghoon Joo, a researcher at NH Investment & Securities, said, “Sales of PET soju began in mid-April, and since marketing efforts are focused on the soju sector in the first half of the year, additional sales and market share growth are expected.”

Operating profit fell 1% year-on-year, failing to meet market expectations. This was due to an increase of about 6 billion KRW in advertising and promotional expenses following the expanded marketing of Cheoeumcheoreom Saero.

However, the inclusion of the Philippine subsidiary in consolidated financials within this year is expected to positively impact performance. Last year, the Philippine subsidiary's sales were 908.7 billion KRW, and if consolidated, the proportion of overseas sales could significantly increase. Researcher Younghoon Joo stated, “Currently, the operating profit margin is estimated at around 1%, so short-term profit contribution is low, but since the goal is to reach 10% within three years, the contribution will gradually increase.”

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