[Featured Stock] Lotte Wellfood Hits 52-Week High... Early Heatwave and Earnings Improvement Expectations Highlighted

Sales Growth and Product Popularity... Stock Price Soars
Rising 'Debt Investment' Enthusiasm and Margin Trading Increase
Ample Potential for Further Valuation Upside

Lotte Wellfood broke its 52-week high after five trading days. This appears to be influenced by the early arrival of 'summer heat' and the popularity of K-food.

As of 9:17 AM on the 17th, Lotte Wellfood is trading at 187,500 KRW, up 5.93% (10,500 KRW) from the previous close. This surpasses the intraday 52-week high of 185,500 KRW recorded on the 10th.

According to Hanwha Investment & Securities, Lotte Wellfood's second-quarter sales are expected to increase by 4.3% year-on-year to 1.0856 trillion KRW, and operating profit is projected to rise by 33% to 64.6 billion KRW. In the domestic market, Lotte Wellfood focuses on summer ice cream and zero-calorie products, while in the global market, it operates local subsidiaries in seven countries including India, concentrating on business expansion. In particular, zero-calorie foods, which use allulose instead of sugar, are popular especially among younger generations. Last month, Lotte Wellfood became the first in the domestic ice cream industry to launch 'ZERO Calorie Ice Cream,' selling approximately 7.2 million units within a month.

The soaring stock price has also fueled enthusiasm for 'debt investing.' As of the 13th, Lotte Wellfood's margin loan balance increased by 402% in one month, from 683 million KRW to 3.427 billion KRW. Margin loan balance refers to the amount investors have borrowed from securities firms for stock investments and have yet to repay. Other food and beverage stocks show similar trends. During the same period, margin loan balances for Haitai Confectionery & Foods (983%), Crown Confectionery (164%), CJ Seafood (163%), Hansung Enterprise (141%), Pulmuone (128%), and Dongwon F&B (108%) also showed steep increases.

Researcher Kwon Woo-jung of Kyobo Securities said, "Despite the recent valuation increase in the food and beverage sector, the current 12-month forward price-to-earnings ratio (P/E) is 10 times, which is not a significantly burdensome level," adding, "Considering past stock price revaluation periods, there is room for further valuation growth."