[Edaily Reporter Kwon Oh Seok ] HANWHA INVESTMENT & SECURITIES announced on the 30th that it is maintaining its “Buy” rating on LOTTE SHOPPING CO., LTD.(023530)and raising its target price from 280,000 won to 300,000 won.

Lee Jin-hyeop, an analyst at HANWHA INVESTMENT & SECURITIES, stated, “The strong performance of department stores is expected to continue in the second half of the year. This is because, in addition to robust domestic consumption, the contribution of inbound tourism to same-store sales growth is expected to expand due to the increasing share of foreign tourist sales.” He added, “Even if we project that strong domestic and foreign sales trends will increase structurally, it is highly likely that the current momentum will continue through next year.”
He emphasized, “In addition to the strong performance of department stores, momentum at large supermarkets is also expected to grow. Data has begun to confirm that demand lost by Homeplus has been absorbed by competitors since the second quarter, and the low base effect resulting from last year’s third-quarter consumer coupons could come into focus.” He added, “Overseas business expansion, a turnaround in the performance of other subsidiaries, and increased equity method income driven by Uniqlo’s strong performance are all added bonuses.”
He estimated that second-quarter operating profit would reach 123.2 billion won (up 203% year-over-year), exceeding the consensus estimate of 109.0 billion won. The analyst noted, “Along with strong domestic demand, sales growth from foreign customers is continuing, and we estimate the second-quarter same-store sales growth rate for domestic department stores at 14% year-over-year.” He added, “Driven by this strong growth and the effect of operating leverage, operating profit is expected to reach 122.7 billion won (+94%).”
The analyst continued, “Despite the negative impact of high oil price subsidies, domestic hypermarkets are set to record a same-store sales growth rate of +2% in the second quarter as they begin to fully absorb demand shifting away from Homeplus, resulting in an operating loss of 392억 won,” and “While other business units—including home shopping, Cultureworks, and e-commerce—continue their trend of rebounding performance, Hi-Mart’s results, which were sluggish in the first quarter, are expected to be solid due to the impact of SamsungElectronics’ rebate campaign,” the firm predicted.
He added, “In the overseas business, while high growth centered on Vietnam is expected to continue, the slump in the Indonesian hypermarket business is likely to persist.”