[Click eStock] "Lotte Shopping, 3Q Performance Slightly Weak... Improvement Expected from 4Q"

Heungkuk Securities analyzed on the 17th that Lotte Shopping's third-quarter earnings this year are expected to fall short of market expectations. Nevertheless, it maintained a buy rating and a target price of 110,000 KRW, anticipating earnings improvement from the fourth quarter.

On the same day, Jongryul Park, a researcher at Heungkuk Securities, said, "Lotte Shopping's third-quarter consolidated sales are expected to be 3.5 trillion KRW, down 13.3% compared to the same period last year, and operating profit is expected to decrease by 8.3% to 137.5 billion KRW, indicating somewhat weaker-than-expected results." However, he added, "From the fourth quarter, earnings momentum is expected to improve due to last year's low base effect, an increase in foreign tourists, and the impact of restructuring."

In the third quarter, Lotte Shopping's discount stores and supermarkets, which are price-sensitive business types, are expected to improve performance due to growth in existing stores and restructuring. Department stores were analyzed to have underperformed due to the consumption downturn and an increase in overseas travelers. Cultureworks is expected to see a decline in operating profit as fixed costs have increased and blockbuster releases have decreased. Home shopping is also likely to experience a downturn due to rising fixed costs and a decrease in transaction volume.

Researcher Park said, "Operating profit in the fourth quarter is expected to increase by 37.5% year-on-year to 128.1 billion KRW, indicating earnings improvement. This could mark the entry into a profit growth phase." He added, "The low base effect from last year, along with an increase in Chinese group tourists and foreign visitors, will strengthen earnings momentum." Furthermore, he analyzed, "Annual operating profit this year is revised upward to 429.6 billion KRW, a 10.7% increase from last year. With various distribution channels secured and the effects of intensive restructuring over the past three years, the earnings turnaround is expected to continue into next year." He also added, "The stock price, which has experienced continuous declines, could be revalued based on the recovery of earnings momentum. It is necessary to focus on competitiveness in the core business and efforts to strengthen shareholder return policies."

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