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Lotte World Tower (Photo: Lotte Corporation) |
[Alpha Biz= Reporter Kim Jisun] Following Lotte Group's denial of online rumors about a liquidity crisis, the shares of its key listed affiliates stabilized on November 19, recovering from the previous day's decline.
In the KOSPI market, Lotte Chemical closed at 67,200 KRW, up 1.97%, and Lotte Corporation rose 0.73% to 20,700 KRW. Meanwhile, Lotte Shopping dropped slightly by 0.17%, ending at 57,900 KRW.
The rumors, which spread online claiming that Lotte Group was facing a liquidity crisis akin to Daewoo’s collapse, led to a sharp drop in the group’s stock prices. However, Lotte Group's official clarification and confirmation that the rumors were baseless helped restore market confidence.
Securities firms also issued reports dismissing liquidity concerns. Jeon Woo-je of KB Securities stated that Lotte Chemical’s cash flow remains relatively stable, considering its fundamentals. Hanwha Investment & Securities analysts Lee Jin-hyeop and Choi Young-joo pointed out that Lotte Shopping's recent shareholder-friendly policies, such as increased dividend payouts, contradict claims of a liquidity crisis.
Nevertheless, analysts highlighted that the market's reaction to the rumors reflects broader skepticism about Lotte Group's prolonged struggle to overcome underperformance. Both of its main pillars—chemicals and retail—have faced challenges.
Lotte Chemical, once a major profit driver with annual operating profits exceeding 1 trillion KRW from 2015 to 2019, reported a cumulative operating loss of 660 billion KRW for the first three quarters of this year. The company has been heavily affected by oversupply from China and its reliance on basic chemical operations.
Adding to its challenges, Lotte Chemical is grappling with increased debt due to large-scale investments, including the construction of a petrochemical complex in Indonesia, the acquisition of Lotte Energy Materials (formerly Iljin Materials), and financial support for Lotte Engineering & Construction.
Despite these difficulties, Lotte Chemical’s debt-to-equity ratio stood at 75.4% as of Q3, with other financial health indicators remaining relatively sound. While the company is not yet at a liquidity crisis level, experts suggest it should focus on mitigating financial risks to ensure long-term stability.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
