IBK Investment & Securities on the 27th raised its target price for Hotel Shilla to 81,000 won from 64,000 won, citing stabilization in its duty-free business and improving results in its hotel division. It maintained its “buy” rating.
In a report released the same day, IBK analyst Nam Seong-hyeon said he expects the earnings improvement to continue.
Nam said Hotel Shilla posted first-quarter consolidated revenue of 1.0535 trillion won, up 8.4% from a year earlier, and operating profit of 20.4 billion won. He said the results “far exceeded” market expectations.
He said the duty-free unit returned to profitability in the quarter, while profit growth also widened in the hotel and leisure businesses. The hotel division posted operating profit of 8.2 billion won, up 228% from a year earlier, which he attributed to operating leverage.
Nam said the first quarter is typically a slower season and occupancy at Seoul hotels fell, but a sharp rise in the average daily rate helped drive results, calling it meaningful.
He said the ADR increase suggests demand remains strong and that profit leverage could accelerate as performance improves at the Jeju hotel. He also said duty-free operating results are likely to stabilize as the company exits Incheon International Airport.
Nam added that while first-quarter results beat expectations due to temporary factors, the outlook remains positive given easing fixed-cost burdens and the likelihood of more stable earnings.
* This article has been translated by AI.
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