Target raises by line after surprise results in 1Q… Lotte Chilsung reports midday for two days in a row
Lotte Chilsung recorded good results in the first quarter of this year, breaking the 52-week high for two days in a row.
As of the closing price of May 3, Lotte Chilsung closed at 199,500 won, down 0.25% from the previous trading day. Immediately after opening, Lotte Chilsung rose to 209,000 won, recording a 52-week high for two days in a row. After that, it maintained a strong trend, but as the market close neared, it closed slightly lower on a selling trend.
Based on the good performance, the stock market started to raise the target of Lotte Chilsung one after another. Yuanta Securities raised its target price by 10,000 won from 240,000 won to 250,000 won, while Hi Investment & Securities raised its target price from 220,000 won to 240,000 won.
In the first quarter, Lotte Chilsung posted consolidated sales of 626.3 billion won and operating profit of 59.7 billion won, up 16% year-on-year. Park Eun-jung, an analyst at Yuanta Securities, said, “The operating profit exceeded the market expectation by 35%. appeared,” he analyzed.
In the beverage sector, the expansion of the ‘zero carbonate’ market played a major role. Beverage sales alone recorded 389.9 billion won, a 12% increase from the same period last year, and an operating profit of 32.8 billion won, up 47%. In particular, it is evaluated that carbonic acid sales increased by 18% due to the expansion of the zero carbonate market, driving the growth of the beverage business. In fact, among the MZ generation, the demand for zero soda drinks to reduce sugar is rapidly increasing. Lotte Chilsung, which has already gained popularity with ‘Pepsi Zero’ and ‘Chilsung Cider Zero’, launched a zero-calorie fruit carbonated drink ‘TOMS Zero’ on April 11th. The company plans to release zero-calorie versions of ‘Milkis’ and ‘Hot Six Ducking’ within this year, and is more aggressively entering the zero-carbonated market.
Alcoholic beverages were also good. In the first quarter, sales of the alcoholic beverage business increased 21.1% to 194.2 billion won, and operating profit increased 133.5% to 21.6 billion won. Lotte Chilsung Beverage said, “The 19.9% increase in soju sales seems to have been partially affected by the increase in the factory price on March 5,” and “wine sales also increased by 27.8%,” said Lotte Chilsung Beverage. Lee Kyung-shin, an analyst at Hi Investment & Securities, said, “In view of the 19.3% growth in non-alcoholic sales in the first quarter of this year, we are raising our target price as we expect to see steady earnings this year.”
In addition, KB Securities (195,000 won → 240,000 won), Cape Investment & Securities (200,000 won → 240,000 won), Shinhan Financial Investment (210,000 won → 240,000 won), and Kiwoom Securities (220,000 won → 240,000 won) also raised their target price for Lotte Chilsung. All at once, they raised the price to 240,000 won and predicted that the atmosphere of surprise earnings in the first quarter would continue.
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