Moody's gives Lotte Shopping A3

Moody's Investors Service said it has assigned an A3 issuer rating to Lotte Shopping Co Ltd.

This is the first time that Moody's has assigned a rating to the company.

The outlook is stable.

"The A3 rating mainly reflects Lotte Shopping's significant strengths in its key earnings driver, namely the Korean department store segment, as demonstrated by its clear leadership position, proven execution and merchandising ability, and high barriers to entry," said Chris Park, a Moody's vice president/senior analyst, adding, "The rating is also underpinned by its excellent financial profile, robust earnings and increasing contribution from more stable retail business formats such as the hypermarket and supermarket segments."

"The company has exhibited excellent financial leverage and cash flow measures following the IPO in 2006, as demonstrated by (excluding Lotte Card-related) debt/EBITDA of 1.6-1.7x and retained cash flow/net debt of about 70% in 2008. While Moody's expects the company's financial metrics to weaken to some extent over the next few years due to ambitious capex programs and the economic downturn, such ratios are likely to remain consistent with its A3 rating," added Park.

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