[Click eStock] "Lotte Shopping, Operating Profit Growth... Target Price Up 10%"

Operating Profit Expected to Grow Double Digits... Maintaining 'Buy' Recommendation

KB Securities announced on the 14th that it is raising the target price for Lotte Shopping by 10% to 110,000 KRW. The investment rating was maintained at 'Buy.'

Shinae Park, a researcher at KB Securities, explained, "We slightly adjusted the operating profit estimates for 2024-2025 by 3% and reflected the increase in the EV/EBITDA multiple applied to discount stores, supermarkets, and Uniqlo based on the average overseas peer multiples."

KB Securities expects Lotte Shopping's performance to have improved annually since 2021, and thanks to its profitability-focused management strategy, operating profit is projected to grow double digits again this year. Accordingly, total sales for this year are forecasted at 20.9885 trillion KRW, with operating profit at 589.6 billion KRW.

Researcher Shinae Park analyzed, "Lotte Shopping plans a scenario where the profitability of its subsidiaries, including discount stores and supermarkets, overseas businesses, home shopping, and Culture Works, will significantly improve this year, contributing to overall profit growth."

Regarding department stores, same-store sales are expected to grow by only 3%, but operating profit is anticipated to increase by 4% due to reductions in labor costs and depreciation expenses, as well as a slowdown in the rise of water and utility costs. The combined operating profit of discount stores and supermarkets is expected to increase by 19%. This reflects the continuation of cost improvements through integrated sourcing from last year into this year, as well as the planned start of logistics integration between the two business units this year. Home shopping is estimated to increase operating profit by 16.7 billion KRW, based on a low base effect.

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