"Lotte Wellfood Target Price Lowered on Sector Downturn... Fundamentals Remain Solid" [Click e-Stock]

NH Lowers Lotte Wellfood Target Price from 170,000 Won to 150,000 Won

On July 7, NH Investment & Securities maintained its "Buy" investment rating on Lotte Wellfood but lowered its target price from 170,000 won to 150,000 won.

Joo Younghoon, an analyst at NH Investment & Securities, stated, "The downward revision of the target price is based on a change in the valuation multiple reflecting a decline in sector valuation." However, he assessed that Lotte Wellfood's fundamentals remain unchanged. Analyst Joo explained that the company faced a lower base last year due to one-off costs, including an increase in Kakao's cost ratio, plant consolidation, and labor expenses, making a significant improvement in operating profit possible this year. While there are burdens from a weaker won and higher raw material prices, he noted that the company is highly likely to achieve its annual guidance. In addition, overseas subsidiaries—especially those in India—are delivering solid sales performance, paving the way for normalization.

He particularly forecast that the company's results for the second quarter of this year would exceed market expectations. He estimated that, on a consolidated basis, second-quarter sales and operating profit would reach 1.1161 trillion won and 50.5 billion won, respectively. Domestic sales are expected to increase by 3.1% year-on-year, while overseas sales are also projected to grow by 11.1%, continuing double-digit growth.

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