Korea Investment & Securities Co. on the 31st said Lotte Shopping's results will improve on the back of a rebound in domestic consumption and rising sales to foreign visitors. It maintained a "Buy" rating and raised the target price to 120,000 won from 94,000 won. Lotte Shopping's previous trading day closing price was 107,400 won.
Korea Investment & Securities Co. assessed that Lotte Shopping will post results in the first quarter of this year that beat market expectations.
Kim Myeong-ju, an analyst at Korea Investment & Securities Co., said, "Domestic department store results are very solid thanks to the rebound in domestic consumption that continued from the start of the year and the increase in sales to foreign visitors," adding, "Since December last year, Homeplus Co. store closures have continued, and thanks to that, even after reflecting expenses related to domestic hypermarket and online businesses, operating profit is expected to come in at 8.6 billion won, up 28.1% from a year earlier."
Kim said the domestic indicators that affect Lotte Shopping's results are in a positive condition.
First, it was analyzed that the pace of domestic population decline will slow, as the number of newborns has begun to increase.
Kim said, "Since July last year, the number of newborns has begun to increase from a year earlier, and this year the resulting decrease in population has shrunk significantly," adding, "The number of marriages, a leading indicator of the number of newborns, has continued to increase recently, so Korea's population decline will slow further for the remainder of this year."
Kim also saw a short-term recovery in domestic demand. He said, "Government stimulus measures implemented in the second half of last year have taken effect, and domestic consumption rebounded this year," adding, "The war between the United States and Iran has heightened macro uncertainty and weighs on consumer sentiment, but the government's additional supplementary budget will offset this to some extent."
Kim then assessed that in the first quarter of this year, Lotte Shopping will post consolidation-based revenue of 598.8 billion won, up 4.1% from a year earlier, and operating profit of 210.5 billion won, up 42%.