[Click eStock] "Shinsegae, Expectation for Industry Recovery Delayed to Q2"

[Asia Economy Reporter Oh Ju-yeon] NH Investment & Securities forecasted that Shinsegae's operating environment in the first quarter of this year will remain challenging due to the resurgence of COVID-19 and intensified duty-free store promotions. However, they assessed that the strategy of buying at a low price remains valid, as there is high potential for stock price increases with expected performance recovery from the second quarter onward.

Shinsegae's consolidated net sales for the fourth quarter of this year are projected to be 1.3132 trillion KRW, and operating profit is expected to be 41.8 billion KRW, representing decreases of 26% and 78%, respectively, compared to the same period last year.

The department store segment is expected to record net sales of 410.7 billion KRW and operating profit of 47.7 billion KRW, down 4% and 44%, respectively, year-on-year. The duty-free store segment is projected to have net sales of 434.1 billion KRW, a 50% decrease compared to the same period last year, and operating profit is estimated to return to a loss.

Researcher Lee Ji-young stated, "Sales fell short of expectations due to the rapid growth of the Hainan duty-free store, and operating losses are expected to continue due to intensified marketing and promotions, as well as changes in lease accounting for Incheon Airport rent (from this quarter, only part of the discounted quarterly rent amount is recognized in accounting, not the entire amount)."

Other consolidated subsidiaries are also generally expected to be negatively impacted by the resurgence of COVID-19.

However, reflecting the increase in the value of assets available for sale, such as the rise in Samsung Life Insurance's stock price, the target stock price was raised from 270,000 KRW to 290,000 KRW, while maintaining a 'Buy' investment rating.