[Click e-Stock] Lotte Himart Begins Performance Turnaround... Target Price Raised

Target Price Raised by 13% Compared to Previous Level

On July 29, NH Investment & Securities reported that a performance turnaround has begun for Lotte Himart and raised its target price from 8,200 won to 9,300 won. The investment opinion was maintained as 'Hold'.

Joo Younghoon, an analyst at NH Investment & Securities, explained, "A performance turnaround has started as a result of structural innovation efforts over the past two years. Taking this into account, we have raised the applied price-to-book ratio (PBR) multiple from 0.21 times to 0.24 times, resulting in a 13% increase in the target price compared to the previous level."

The implementation of the 'Eutdeumefficiency Home Appliance Purchase Cost Reimbursement Program' is expected to support a recovery in domestic demand for home appliances. Analyst Joo stated, "The launch of the Eutdeumefficiency Home Appliance Purchase Cost Reimbursement Program, which reimburses 10% of the purchase cost for top-rated energy-efficient home appliances, is expected to have a positive impact on appliance demand. Although absolute profitability indicators remain weak and there is a possibility of goodwill impairment losses, we are maintaining a conservative investment opinion. However, this is a period where expectations may be reflected in the share price."

Lotte Himart's performance in the second quarter of this year was solid despite a sluggish industry environment. On a standalone basis, Lotte Himart's second-quarter sales increased by 1% year-on-year to 594.2 billion won, and operating profit surged by 277% to 10.5 billion won, exceeding the consensus (the average forecast by securities firms). Analyst Joo noted, "It should be considered that there was a one-off gain of 6.6 billion won related to VAT reimbursement, but even excluding this, the results improved compared to last year. It is encouraging that sales increased for two consecutive quarters, including the first quarter. Although the sales growth rate cannot be considered high, Lotte Himart's market share is increasing, given that the domestic home appliance market is still experiencing significant negative growth."

It is also evaluated that initiatives such as subscription services and the expansion of the private brand (PB) share, which Lotte Himart is pursuing, are showing results. Analyst Joo said, "Performance improvement is estimated to be due to the results of Lotte Himart's ongoing subscription services and the expansion of PB share, and there are plans to further expand these in the second half of the year. Additionally, attention should be paid to the launch of the nationwide Apple repair reception service from July 21. Considering the approximately 1.2 million annual repair cases in Korea, this is expected to contribute to attracting new customers."

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