Wednesday, July 16th, 2014
SEOUL, KOREA - Ahead of the summer season, the Lotte Chilsung Beverage Co. stock is getting hotter every day. Its share price has soared to the all-time high level and the market capitalization has reached 2.41 trillion won. Its market value at the beginning of the year was 1.86 trillion won. It was largely due to the three positive factors, including the high growth of its liquor business, a lowered cost thanks to falling grain prices originating from the strong won, and the expectations on higher dividend payouts.
At 10:10 am on July 15, Lotte Chilsung shares were traded at 1,940,000 won, 4.98 percent higher than the previous day. Immediately after the market's opening, it once rose to the level of 1.96 million won, the all-time high. Beginning in early June, the shares of Lotte Chilsung have consistently been on an upward trend except for three days.
Kim Yoon-oh, analyst with Shinyoung Securities, said, "The company's plunge into the beer business is considered a success. It is likely the company's sales revenue and profitability will improve because of that." In general, liquor business including that for beer is much more profitable than non-alcoholic beverage business.
"Beginning in 2016, [Lotte Chilsung's] profitability improvement will be visible. This year's operating profit will decline 8.4 percent from a year ago due to a higher initial marketing cost for its beer business, followed by a slight improvement in 2015 and a 15-percent rise year on year in 2016," he added.
Since the 2008 global financial crisis, Lotte Chilsung has focused on the liquor business as its growth engine. Its ranking in the overall liquor industry is No. 3, with the ranking for the soju (Korean vodka) market second highest.