Hotel Shilla Recovers to 90,000 Won... Emerging from the Impact of COVID-19?

Hotel Shilla exterior view

[Asia Economy Reporter Song Hwajeong] Hotel Shilla recorded solid performance in the first quarter of this year, showing signs of recovery from the COVID-19 shock, and its stock price also regained the 90,000 KRW mark.

As of 9:30 AM on the 6th, Hotel Shilla's stock price rose 1,200 KRW (1.33%) from the previous day to 91,600 KRW. During the session, it climbed to 91,900 KRW, setting a new 52-week high just one day after the previous record. On the 4th, Hotel Shilla closed at 90,400 KRW, up 1.35% from the previous day, marking the first time since February 20 of last year that it closed above 90,000 KRW.

Hotel Shilla struggled last year as it was hit hard by COVID-19, with its stock price falling to the 60,000 KRW range. However, with strong performance recorded in the first quarter of this year, it is interpreted that the company is recovering from the COVID-19 shock, which is reflected in the rising stock price. In the first quarter, Hotel Shilla posted sales of 727.2 billion KRW and an operating profit of 26.6 billion KRW. Although sales decreased by 23% compared to the same period last year, operating profit turned positive and significantly exceeded market expectations (consensus).

Following the strong first-quarter results, securities firms have successively raised their target prices for Hotel Shilla. Kiwoom Securities raised its target price from 105,000 KRW to 120,000 KRW, KTB Investment & Securities from 90,000 KRW to 110,000 KRW, Mirae Asset Securities from 100,000 KRW to 115,000 KRW, and KB Securities from 100,000 KRW to 110,000 KRW. Researcher Baesong from KTB Investment & Securities said, "It is now a good time to buy," adding, "Profitability improvement was stronger and faster than expected, leading to upward revisions of earnings estimates. Considering the price-to-earnings ratio (PER) of 26 times based on the expected normalization in 2022, which is the early stage of the turnaround, the burden has also eased."