[Market Focus] Lotte Chilsung Rises on Strong Q2 Earnings

Lotte Chilsung has been continuing its upward trend for three consecutive days.

As of 9:57 a.m. on the 5th, Lotte Chilsung was trading at 136,800 won on the Korea Exchange, up 2,000 won (1.48%) from the previous day.

The previous day, Lotte Chilsung announced in a regulatory filing that its consolidated operating profit for the second quarter of this year was provisionally tallied at 62.4 billion won, up 3.5% from the same period last year. During the same period, sales decreased by 1.1% to 1.0873 trillion won, but net profit increased by 31.6% to 27.7 billion won. Cho Sanghoon, a researcher at Shinhan Investment Corp., analyzed, "Lotte Chilsung's second-quarter results exceeded the consensus (average of securities firms' forecasts) by 8%," and added, "Despite sluggish domestic consumption, unfavorable weather conditions, and the burden of raw material and fixed costs, the company performed better than the lowered expectations."

Strong performance by overseas subsidiaries drove the results. Ryu Eunae, a researcher at KB Securities, said, "Thanks to the strong performance of overseas subsidiaries, the second-quarter results were a pleasant surprise," and continued, "With the overseas subsidiaries, which are the main investment point for Lotte Chilsung, now making a full-fledged contribution to earnings, it is time to expect both upward revisions to earnings forecasts and a re-rating (revaluation)." She added, "Starting from the third quarter, annual earnings are expected to follow a low-to-high trajectory, and the distribution of livelihood recovery consumption coupons will maximize the profit leverage effect."