[Click eStock] "Global Tax Free, Meaningful Performance Growth Expected This Year"

[Asia Economy Reporter Yoo Hyun-seok] KB Securities analyzed on the 21st that Global Tax Free is likely to achieve meaningful performance due to a favorable business environment for tax refund sales growth. No investment opinion or target price was provided.

Global Tax Free is the number one company in the domestic tax refund (domestic tax refund agency) market. The tax refund business acts as an agent for foreign tourists applying for tax refunds using post-tax-free shops and collects agency fees. Since acquiring KTIS's tax refund business in March last year, its market share is estimated to be over 65%.

KB Securities expects a favorable business environment this year. Researcher Lee Byung-hwa of KB Securities said, "If the easing of the THAAD restrictions coincides with a clear increase in Chinese tourists, meaningful performance growth is expected this year," adding, "The number of Chinese tourists reached an all-time high of 8.07 million in 2016 but sharply dropped to 4.17 million in 2017 due to the THAAD restrictions, and has been recovering to 5.51 million as of November last year."

He said, "As of the third quarter of last year, the sales ratio between Chinese and other foreigners was 54 to 46, which is a lower dependence on Chinese sales compared to 75 to 25 in 2016," emphasizing, "This is a structural performance improvement due to the number one operator and stable infrastructure, and with the lifting of the THAAD restrictions, the virtuous cycle of tourist increase → refund application increase → performance improvement will become clearer."

He also forecasted that government policies would be a positive factor. He explained, "The Ministry of Economy and Finance announced that from April, the immediate refund limit amount for post-tax-free shops for foreign tourists will be expanded," adding, "Upon implementation of the amendment, the immediate refund limit will be increased from the existing 300,000 KRW per transaction and under 1,000,000 KRW per person to 500,000 KRW per transaction and under 2,000,000 KRW in total."