Kiwoom Securities announced on June 10 that it has raised its target price for Shinsegae from 630,000 won to 850,000 won, citing the company's strong growth compared to its competitors. The firm maintained its "buy" rating on the stock.
Park Sang-jun, a researcher at Kiwoom Securities, noted that the positive effects of a strong domestic stock market and an increase in Chinese tourist arrivals have led to stronger-than-expected foreign sales for Shinsegae. As a result, he has revised upward the company's earnings forecasts for the second quarter and the full year.
Park projected Shinsegae's consolidated operating profit for the second quarter to reach 171 billion won, a 127% increase from the same period last year. He highlighted that Shinsegae is experiencing significant growth, particularly due to the effects of large store renovations and robust luxury goods sales, prompting a 25% increase in the forecast for same-store sales growth in department stores.
Improvements in the performance of key subsidiaries are also anticipated. Park expects that the favorable department store market will continue to boost profits for Shinsegae International and Central City. He also predicted that the duty-free segment would see a significant improvement in profitability compared to the previous quarter, aided by reduced rental costs at the Incheon International Airport location.
Park added, "Shinsegae's sensitivity to the domestic consumption market is high due to the strong performance of its major subsidiaries, which will create strong momentum for overall performance improvement."
As a result, he forecasts that this year's operating profit will increase by 70% year-on-year to 816.9 billion won. Park analyzed that the upward trend in the stock market is being driven by improved earnings among major domestic companies. He also mentioned that the effects of performance bonuses and wage increases early next year will support expanded consumer spending, while the weak won and the increase in Chinese tourists are expected to structurally raise the proportion of foreign sales from the current 7-8% level.
* This article has been translated by AI.
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