Kiwoom Securities, Lotte Shopping target price ↓… “Wealth effect worsens due to decline in domestic stock market”

On the 9th, Kiwoom Securities lowered the target stock price for Lotte Shopping [023530] from 160,000 won to 130,000 won, explaining, "It reflects the impact of the recent decline in the domestic stock market."

Researcher Park Sang-jun said, “We have lowered the growth forecast for existing department stores in the fourth quarter from 7.5% to 4% to reflect the deteriorating effect of asset effects.”

The analysis is that domestic consumer sentiment may be suppressed due to the lowered wealth effect following the recent plunge in the domestic stock market.

Previously, Lotte Shopping announced on the 6th that its operating profit in the third quarter of this year was provisionally calculated to be 175.6 billion won on a consolidated basis, an increase of 34.5% compared to the same period last year. Sales increased 7.1% to 3.6532 trillion won.

Researcher Park explained that Lotte Shopping's operating profit in the third quarter was in line with the lowered market consensus (forecast).

At the same time, it predicted increased costs and a worsening business environment in the fourth quarter. In particular, he explained, “Despite the increase in sales at domestic department stores and discount stores, an overall conservative approach will be necessary considering the burden of one-time increase in labor costs related to voluntary retirement and the increase in costs related to the Busan online logistics center (e-grocery).”

However, he said, "There are still expectations for a large income effect in the first quarter of next year," and "the department store growth rate forecast may rebound in the medium term." At the same time, the investment opinion of ‘buy’ was maintained.

The current stock price of Lotte Shopping is 89,700 won based on the previous closing price.