April 25, 2024

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[THE INVESTOR] Lotte Food’s profits will continue regaining, said NH Investment and Securities on June 28, maintaining a “buy” recommendation and raising the target price to 900,000 won (US$803.14) from 850,000 won.

Its revenue in the second quarter will rise 2.5 percent on-year to 488.1 billion won and operating profit by 19.7 percent to 23.4 billion won, in line with market expectations. Earnings momentum from the last quarter will be maintained due to further decline of key raw material prices and easing competition in processed food. As the company spends more than 500 billion won a year to buy pork and palm oil, the price decline is a crucial factor for its profitability. Domestic pork prices are stable while international palm oil prices have fallen an additional 10 percent since May, said analyst Han Guk-heui

The fluctuating exchange rate is an uncertainty but the price of main ingredients are sliding and stabilizing, noted the analyst, adding that its current stock price at 13 times its price-earnings ratio is attractive compared to the industry average.

By Hwang You-mee (glamazon@heraldcorp.com)