[Click eStock] "Lotte Wellfood, Domestic and International Profitability Improvement... Target Price Maintained"

DS Investment & Securities maintained its buy rating and target price of 170,000 KRW for Lotte Wellfood on the 7th, stating that "a revaluation is expected due to the future expansion of overseas business proportions."

On the same day, Ji-hye Jang, a researcher at DS Investment & Securities, said, "Lotte Wellfood's first-quarter performance recorded consolidated sales of 951.1 billion KRW and operating profit of 37.3 billion KRW," adding, "Operating profit increased by 101% compared to the same period last year, slightly exceeding market expectations."

In the domestic business, the confectionery segment saw increased sales in gum, candy, and snack lines, but the overall scale was sluggish due to a 26% decrease in food ingredient sales caused by channel rationalization efforts. The ice cream segment experienced a slight sales decline (-0.2%) due to unfavorable weather conditions. The dairy segment showed a decline in scale (-6%) due to price reductions, but profitability improved thanks to a base effect from the high costs reflected in the previous year.

The overseas business showed strong performance centered on the Indian market. Researcher Jang explained, "In the confectionery segment, the effect of the third line expansion of Chocopie in October last year led to quarterly sales surpassing 30 billion KRW. Next year, we plan to grow by establishing the Pepero line as the second Lotte confectionery brand." She added, "Although ice cream sales in India slightly decreased in the first quarter due to unfavorable weather, sales are growing rapidly this month with the warmer weather."

Furthermore, Researcher Jang stated, "Sales of the Indian subsidiary are expected to grow at an average annual rate of 16-20% from last year through 2028," adding, "The proportion of Indian sales within overseas business is estimated to expand from 26% in 2021 to 36% this year."

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