[Click eStock] Lotte Chilsung, Second Half Better Than First Half

NH Investment & Securities Report
Target Stock Price Lowered by 10%

NH Investment & Securities on the 8th lowered the target price for Lotte Chilsung by 10.9% to 205,000 KRW. This figure reflects concerns over intensified competition in the alcoholic beverage industry. The investment rating of 'Buy' was maintained.

Second-quarter sales and operating profit are expected to be 795.5 billion KRW and 60.1 billion KRW, respectively. Operating profit is projected to decrease by 6% compared to the same period last year.

Sales growth rates for the beverage and alcoholic beverage sectors are expected to be around 3% and 6%, respectively. Monthly sales of Cheoeum-Cheoreom Saero in May are estimated to be about 11 billion KRW, showing an upward trend compared to the previous month. The effect of starting PET bottle soju sales from mid-April is expected to lead to additional sales growth as the product settles in the market.

In the second half of the year, improvement in the beverage business performance is anticipated due to increased preference for zero-carbonated drinks and expansion of the product portfolio. Younghoon Joo, a researcher at NH Investment & Securities, said, “Considering that sales performance of Cheoeum-Cheoreom Saero PET bottles is now reflected, the momentum for performance improvement in the second half remains high,” adding, “The current stock price is at a price-to-earnings ratio (PER) of about 8.4 times, and considering the momentum of the Philippine subsidiary’s consolidation within the year, the investment appeal is sufficient.”

The beer sector is expected to shift focus to the second half due to fierce market share competition. This is because significant performance improvement is anticipated from increased operating rates resulting from hybrid production at the beer factory. Researcher Younghoon Joo analyzed, “Beer sales performance continues to show a relatively sluggish trend, but the results of new product launches at the end of the year are worth looking forward to.”

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