[Click eStock] "Lotte Shopping, Consumer Economy Slump... Target Price Down"

Heungkuk Securities on the 27th lowered the target price for Lotte Shopping to 95,000 KRW, reflecting the downturn in consumer sentiment and business conditions. The investment rating was maintained at 'Buy.'

Researcher Park Jong-ryeol stated, "The target price was lowered because the target EV/EBITDA multiple was adjusted down from 5.2 times to 4.9 times to reflect the downturn in consumer sentiment and business conditions." The 4.9 times multiple represents a 45% discount compared to the recent 5-year average of 9.0 times.

Park added, "The prerequisite for the company's stock price, which has shown a continuous downward trend, to be re-evaluated needs to be considered in terms of expanding shareholder returns and securing growth drivers."

However, he gave a positive outlook on the earnings forecast for the second quarter of this year. He projected consolidated sales for Q2 to be 3.5 trillion KRW, down 2.2% year-on-year, and operating profit to increase by 19.6% to 60.7 billion KRW. He also expected the trend of earnings turnaround in the second half to continue.

Park said, "Despite losses in e-commerce in the second quarter, steady profit generation from department stores, strong performance in supermarkets, and improved results from consolidated subsidiaries are expected."

He added, "Although the first half results will be weaker than initially expected, the earnings turnaround trend will strengthen in the second half and is likely to continue into next year. Despite the consumer downturn, the restructuring efforts carried out over the past three years will enable profitability improvements across all business divisions."