NH Investment & Securities said on the 2nd that LOTTE Wellfood's earnings are expected to rebound as sales of its products improve with the distribution of people's livelihood recovery consumption coupons. It maintained a target price of 160,000 won and a "buy" investment rating. LOTTE Wellfood's closing price in the previous trading day was 114,800 won.
NH Investment & Securities estimated LOTTE Wellfood's consolidated third-quarter revenue and operating profit this year at 1.1306 trillion won and 76.2 billion won. Revenue is up 5% from a year earlier, and operating profit is the same as a year ago.
Researcher Ju Yeong-hun at NH Investment & Securities explained, "As in the second quarter, one-off costs such as plant consolidations and labor costs are expected to be reflected, so the actual improvement in operating profit will be faster than this."
Domestic business revenue appears to have improved by 3% from last year. As consumer sentiment improved, the effect of distributing people's livelihood recovery consumption coupons boosted sales of key products. In particular, with the heat lingering through the third quarter, frozen dessert sales appear to have improved the most.
Ju said, "Overseas business revenue will increase 12% from a year earlier," adding, "Although the revenue growth in the India business is disappointing compared with earlier expectations, it is positive that a recovery is expected in Kazakhstan, and other major countries are also solid."
On this year's basis, LOTTE Wellfood's overseas business revenue is 23%, higher than the industry average. It is expected to rise to 35% by 2028.
Ju said, "Recently, the food and beverage sector has seen growing polarization in valuation depending on overseas business performance," adding, "Given this, LOTTE Wellfood's overseas business performance could serve as a catalyst for a valuation re-rating."