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[Alpha Biz= Reporter Kim Minyoung] IBK Investment & Securities maintained its "Buy" rating and target price of 220,000 KRW for Lotte Wellfood, citing expectations for growth in the second half of the year due to the normalization of profits in the preserved foods division and the expansion of the OKcal ice cream product lineup.
In a report released on the 5th, IBK Investment & Securities stated, "With the completion of the first phase of the new Pune factory in India during the third quarter, Lotte Wellfood is expected to increase ice cream production capacity by 50% (approximately 150 billion KRW). The planned expansion of the Choco Pie 4th line and Pepero production, the unification of raw material sourcing following the merger of Lotte India and Havmor, and the expansion of distribution coverage and investment should continue to drive overseas growth."
The firm also noted, "Considering that the overseas operating profit margin (including exports) is approximately twice as high as the domestic margin, there is significant potential for long-term profitability improvement."
For the second quarter, Lotte Wellfood reported sales of 1.044 trillion KRW, up 0.3% year-on-year, and an operating profit of 63.3 billion KRW, up 30.3%, meeting market consensus for sales but falling short in operating profit. While profitability improved across the confectionery, ice cream, and preserved foods divisions, the results did not meet the heightened expectations. Domestic sales decreased by 0.6% to 836.6 billion KRW, while operating profit increased by 19.6% to 41.8 billion KRW.
Alphabiz Kim Minyoung (kimmy@alphabiz.co.kr)
