[Click eStock] Earnings Improvement and Real Estate Value "Lotte Chilsung Target Price Raised"

[Asia Economy Reporter Lee Seon-ae] Kiwoom Securities maintained a buy rating on Lotte Chilsung on the 3rd and raised the target price to 240,000 KRW.

Park Sang-jun, a researcher at Kiwoom Securities, emphasized, "Kiwoom Securities expects fundamentals to improve due to demand recovery following the reopening and strong sales of zero-carbonated beverages. Additionally, the development prospects of the Seocho-dong site are expected to act as a positive momentum for valuation level increases."

Through the Q1 earnings conference call, Lotte Chilsung projected that Q2 sales and operating profit would increase by 7% and 20-30%, respectively, compared to the previous year. However, despite strong Q1 results, the company maintained its annual guidance (separate basis operating profit increase of 15-20%) but mentioned that adjustments could be made depending on future market conditions and performance trends.

Expectations for annual performance improvement this year are rising, supported by the recovery in beverage and liquor demand following the reopening and strong sales of zero-carbonated beverages (with the 2022 expected sales raised to 180 billion KRW). The company also noted that the visibility of development for the Seocho-dong site has become clearer compared to the past, which is positive.

Researcher Park said, "Lotte Chilsung plans to launch a new soju product in August after about a year of preparation," adding, "Marketing expenses may increase in Q3 accordingly, but if the new product performs well, it could lead to upward revisions of next year's earnings estimates."