[Click eStock] "Lotte Chilsung to Meet 2Q Expectations... Target Price Maintained"

[Asia Economy Reporter Myunghwan Lee] Hana Financial Investment announced on the 24th that it maintains a buy rating and a target price of 240,000 KRW for Lotte Chilsung. This is because Lotte Chilsung is expected to deliver results in the second quarter of this year that meet market expectations, based on solid beverage and liquor performance.

Hana Financial Investment forecasted that Lotte Chilsung will achieve results in the second quarter that meet market expectations. The company's consolidated sales for the second quarter are expected to increase by 11% year-on-year to 742.6 billion KRW, and operating profit is expected to rise by 35% to 61.5 billion KRW.

Beverage sales are seen as still robust, growing 10% year-on-year. It is judged that demand for carbonated drinks centered on the 'Zero' beverage series remains strong. Liquor sales are also expected to increase by 14.8% compared to the same period last year. This growth is anticipated due to the base effect from last year and the impact of price increases for soju and beer. It is estimated that both soju and beer sales in April and May grew by double digits, and profitability is expected to improve significantly.

Hana Financial Investment estimated Lotte Chilsung's consolidated sales and operating profit for this year at 2.7863 trillion KRW and 243.8 billion KRW, respectively. These figures represent increases of 11.2% and 33.8% year-on-year, indicating a solid performance trend that meets the heightened market expectations. In beverages, the effect of new product mixes and the rising market share of the 'Zero' series continue. Competitors have raised prices of carbonated drinks again this year due to increased cost burdens, following last year. Considering the price differences, the possibility of further price hikes cannot be ruled out. In liquor, demand recovery effects are expected to strengthen in the second half of the year.

Sim Eunju, a researcher at Hana Financial Investment, said, "Market expectations for performance continue to rise," but added, "Fortunately, the company is expected to deliver results that meet these heightened expectations."