[Click eStock] "Lotte Shopping, Earnings Momentum Recovery... Target Price Up"

[Asia Economy Reporter Son Sun-hee] Heungkuk Securities announced on the 10th that it has upgraded its investment opinion on Lotte Shopping to 'Buy' and raised the target price from 120,000 KRW to 140,000 KRW.

Lotte Shopping's annual sales last year were 15.556 trillion KRW (consolidated basis), similar to the previous year. However, operating profit increased nearly 2.5 times from 20.8 billion KRW the previous year to 50.1 billion KRW. Lotte Shopping undertook efforts last year to reduce underperforming offline stores such as large marts, supermarkets, and LOBS. As a result, while top-line growth stagnated, profitability improved.

This year, with continued strong department store performance and the effects of restructuring, improvements in earnings are expected across all business divisions. Although the electronics retail sector is inevitably facing weak performance, Culture Works' earnings are expected to continue improving with the transition to endemic. Additionally, the e-commerce sector is anticipated to reduce its deficit as industry competition eases.

Park Jong-ryeol, a researcher at Heungkuk Securities, said, "Considering the turnaround trend in this year's earnings, we are raising the target price to 140,000 KRW," adding, "The stock price, which has continuously declined since its peak in March 2021 due to worsening earnings momentum, is likely to be revalued this year based on a real recovery in earnings momentum." He further stated, "Strengthening fundamentals through restructuring and a profitability-focused management strategy will be effective."