Korea Investment & Securities on September 17 maintained a target price of 180,000 won and a "buy" rating for Lotte Shopping, highlighting the momentum in the retail sector, including supermarkets and department stores.
Analyst Kim Myung-joo stated, "Sales at domestic department stores have grown by 9-10% compared to the same period last year, which is better than market concerns." He added that Lotte Shopping's discount stores are expected to show the strongest growth among its retail channels, with Lotte Mart projected to achieve around 22% growth year-on-year due to the adjustments at Homeplus stores.
Kim estimated that Lotte Shopping's revenue for the third quarter will increase by 9.1% year-on-year to 3.7205 trillion won, while operating profit is expected to rise by 32.7% to 173.2 billion won. He noted that while sales from department stores and discount stores meet market expectations, the online division and Lotte Hi-Mart may fall short of those expectations.
Kim assessed that Lotte Shopping's valuation remains attractive, and the outlook for the market after Chuseok is positive. He explained, "After a sharp decline in stock prices following the second-quarter results, the valuation attractiveness has increased, and the momentum in the discount store sector is becoming more pronounced. After the risks associated with increased outbound travel are fully reflected, the momentum in the department store sector may also resurface."
However, he cautioned that exchange rate fluctuations could pose a risk. Kim emphasized, "If the stabilized value of the won returns to a trend of strengthening (a decrease in the exchange rate), increased outbound demand could lead to a decline in domestic traffic at department stores, as well as a decrease in sales from foreign customers at those stores."
* This article has been translated by AI.
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