[Click eStock] "Shinsegae International, Structural External Growth Expected... Target Price Up"

[Asia Economy Reporter Song Hwajeong] Meritz Securities evaluated that structural external growth is expected for Shinsegae International on the 9th and raised the target stock price from the previous 240,000 KRW to 260,000 KRW. The investment opinion was maintained as 'Buy.'

Hanuri, a researcher at Meritz Securities, said, "Structural external growth is expected, so we recommend a buy approach as the top pick in the industry," adding, "The cosmetics sector is expanding its portfolio and is scheduled for a global launch in the second half of this year, while the clothing and household goods sectors are expected to improve profitability through offline reduction and online strengthening."

First-quarter earnings this year are expected to exceed market consensus. Meritz Securities estimated Shinsegae International's first-quarter sales at 323.7 billion KRW, a 0.1% increase compared to the same period last year, and operating profit at 18.2 billion KRW, a 52.8% increase. Researcher Han explained, "Thanks to the recovery in domestic sales, it will exceed market consensus by 21.3%."

The cosmetics sector's first-quarter sales are estimated at 92.1 billion KRW, a 0.4% increase year-on-year, but operating profit is expected to decrease by 29.5% to 10.9 billion KRW. Researcher Han analyzed, "The strong performance of imported brands will offset the sluggishness of in-house brands, but profit decline is inevitable due to weakening high-margin channels and increased costs related to brand launches."

The clothing sector is estimated to have first-quarter sales of 182.8 billion KRW, a 0.9% decrease, and operating profit of 8.1 billion KRW, a 558.3% increase. The expansion of high-priced overseas fashion contributions improved profitability, and domestic brands are also improving. For the household goods sector, first-quarter sales are expected to increase by 2.5% to 48.8 billion KRW, but an operating loss of 900 million KRW is estimated, continuing the deficit. However, it is analyzed that the deficit will decrease through store efficiency improvements.