[Click eStock] "Lotte Chilsung, Competitive in Soju and Zero Carbonated Drinks... Market Share Up"

[Asia Economy Reporter Lee Jung-yoon] NH Investment & Securities maintained a buy rating and a target price of 230,000 KRW for Lotte Chilsung on the 7th, citing an increase in market share.

Joo Young-hoon, a researcher at NH Investment & Securities, explained, "The new soju product launched last September, Cheoeumcheoreom Saero, has continued to show results exceeding expectations," adding, "As a result, the market share in the soju market in 2022 also increased by 1.2 percentage points from 2021 to 15.8%."

He continued, "This is considered an encouraging result for Lotte Chilsung, which had experienced a decline in market share in the soju market over the past few years," and said, "Although only bottled soju is currently sold, there are plans to add PET soju in April, so additional sales are expected, and market share is also expected to recover to over 20%."

Currently, Lotte Chilsung's stock price is linked to the performance of the new soju product, but there are also many other positive aspects. It is expected to achieve a company-wide operating profit margin of 9.0% this year through the expansion of the zero-carbonated lineup and reaching the break-even point (BEP) due to increased operation rates of the beer factory.

Lotte Chilsung's consolidated sales in the fourth quarter of last year increased by 12% year-on-year to 669 billion KRW, and operating profit rose by 29% to 24.4 billion KRW. Although the market expectations were slightly missed due to some cost increases related to the launch of Cheoeumcheoreom Saero, overall performance was analyzed as favorable excluding this factor.

In particular, in the liquor sector, soju sales increased by 26% compared to the previous year, with monthly sales of Cheoeumcheoreom Saero rapidly increasing, and last month's sales were estimated to be close to 9 billion KRW. There is also an expectation that annual sales of 130 billion KRW can be achieved.

The researcher added, "Although operating profit slightly turned to a loss due to increased marketing costs in the early launch phase, the expansion of market share is more positive," and added, "Sales and operating profit in the beverage sector increased by 9.8% and 41.4% year-on-year, respectively, and Lotte Chilsung's competitiveness as a leader in zero-carbonated beverages continues to rise."