[Click e-Stock] "Lotte Chilsung to Accelerate Profitability Improvement of Overseas Subsidiaries"

Korea Investment & Securities has forecasted that Lotte Chilsung’s overseas subsidiaries will see a significant improvement in profitability in 2026. The firm maintained its buy rating and target price of 160,000 won.

Kang Eunji, a researcher at Korea Investment & Securities, projected that Lotte Chilsung’s overseas subsidiaries will post sales of 1.7026 trillion won and operating profit of 95.6 billion won in 2026. These figures represent year-on-year increases of 8.9% and 39%, respectively.

Kang explained, “The main driver of operating profit growth is the improvement in PCPPI’s profitability. The profitability improvement project, which began in 2024, will conclude in the third quarter of this year, with one-off expenses such as plant consolidation coming to an end. This will lead to a full-fledged improvement in profitability.” She added, “From a mid- to long-term perspective, expanding the geographical scope of the overseas bottling business could contribute to future top-line growth and an increase in the proportion of overseas sales.”

Recently, favorable crop conditions in Brazil and India, both major sugar-producing countries, are expected to increase sugar supply and have led to a decline in sugar prices. As of the closing on December 9, the price stood at 14.7 cents per pound, trading at levels seen in early 2021.

Kang noted, “In the 2024/25 season, Brazil and India accounted for 24.2% and 15.5% of global sugar production, respectively. Although the recent weakness of the Korean won has increased the cost burden of imported raw materials, the sugar price in 2026, based on won input prices, is expected to decline by double digits compared to 2025.”

Kang cautioned that investors should be mindful of heightened short-term stock price volatility. She explained, “Fourth-quarter results are expected to be weak due to the reflection of one-off expenses such as costs related to voluntary retirement and provisions for long-term employee benefits. As such, investors should be cautious about increased short-term stock price volatility.”

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