[Click eStock] "Lotte Chilsung, the race of 'Cheoeum Cheoreom Saero' continues"

NH Investment & Securities maintained a 'Buy' rating and a target price of 230,000 KRW for Lotte Chilsung on the 31st.

Lotte Chilsung's consolidated sales for the first quarter are expected to reach 681.6 billion KRW, with an operating profit of 66 billion KRW, representing increases of 6% and 11% year-on-year, respectively. This also exceeds market expectations.

Sales in the alcoholic beverages segment are projected to increase by 11% year-on-year to 215.2 billion KRW. The new soju product, Cheoeumcheoreom Saero, is performing well. Saero's monthly sales have risen from approximately 7.9 billion KRW in December last year to the mid-9 billion KRW range currently. If PET soju is launched in the second quarter, monthly sales are expected to steadily exceed 10 billion KRW. Although beer sales are somewhat sluggish, their relatively small share in the overall alcoholic beverage business means this is unlikely to be a concern for the stock price.

Sales in the beverage segment are expected to increase by 7% year-on-year to 418.6 billion KRW. Despite a high base, improvements are anticipated due to increased preference for zero-calorie carbonated drinks and an expanded product portfolio.

Younghoon Joo, a researcher at NH Investment & Securities, stated, “The new soju product Cheoeumcheoreom Saero, launched in September last year, continued to perform well in the first quarter, and with plans to add PET soju in the second quarter, sales growth is expected. Therefore, it is highly likely that the annual market share target of 20% will be exceeded.” He added, “The potential consolidation of the Philippine subsidiary is also positive. If the Philippine subsidiary’s sales of 908.7 billion KRW (as of 2022) are reflected in the consolidated results, the proportion of overseas sales will significantly increase.”