[Click eStock] "Lotte Chilsung, Earnings Improvement Expected Due to Alcohol Price Increase"

[Asia Economy Reporter Lee Jung-yoon] Daishin Securities maintained a buy rating and a target price of 220,000 KRW for Lotte Chilsung on the 7th, forecasting that earnings will be revised upward due to liquor price increases and that the profit growth trend will continue thanks to new beverage and liquor businesses.

Lotte Chilsung announced on the 25th of last month an average price increase of 7% for soju, 5.1% for Cheongha, and 7% on average for Baekhwaseubok. Accordingly, Daishin Securities revised upward its operating profit forecasts by 2 billion KRW for this year and 1.6 billion KRW for 2023.

Additionally, Daishin Securities expects Lotte Chilsung to play a trend leader role in the beverage and liquor markets this year. Researcher Han Yoo-jung of Daishin Securities said, "Functional labeled products such as Trevi Plus and Deohada, which contain indigestible maltodextrin that helps suppress postprandial blood sugar rise and improve blood triglycerides, are expected to create new demand in beverages," adding, "The strong sales of zero-carbonated products, which showed monthly growth trends last year, are also expected to lead the beverage segment’s earnings growth this year."

Researcher Han also anticipated additional market share gains through the expansion of SKUs (single products) for commercial use. The release of RTD (Ready To Drink) liquor products suited to the home drinking culture and products targeting whiskey beginners are also expected to strengthen the other liquor portfolio.

Researcher Han explained, "In the first quarter of this year, beverage sales are expected to grow 9% year-on-year due to continued strong sales of carbonated drinks, the base effect of juice and tea categories, and the impact of new product launches," adding, "OEM (Original Equipment Manufacturer) sales are estimated at 10.5 billion KRW, and non-OEM liquor sales are expected to grow 3% year-on-year, projecting an overall liquor sales growth of 10%."