[Click eStock] "Hotel Shilla, Expected Benefits from Travel Demand Recovery... Target Price Up"

[Asia Economy Reporter Song Hwajeong] Kiwoom Securities raised the target price for Hotel Shilla from 120,000 KRW to 125,000 KRW on the 24th, expecting benefits from the recovery in travel demand. The investment rating was maintained as 'Buy.'

Park Sangjun, a researcher at Kiwoom Securities, said, "We raised the target price due to upward revisions in earnings estimates," adding, "We expect a very strong operating leverage effect from sales recovery in the phase of travel demand normalization after vaccination."

Second-quarter earnings this year are expected to exceed market expectations. Kiwoom Securities forecasted Hotel Shilla's consolidated sales and operating profit for the second quarter at 874.2 billion KRW and 49.6 billion KRW, respectively. Sales are estimated to increase by 67% compared to the same period last year, and operating profit is expected to return to the black. Researcher Park explained, "Due to the recovery of demand from Chinese peddlers (ttaigong) and increased domestic lodging demand, the company's overall sales and profitability will improve significantly compared to the first quarter." Downtown duty-free store sales are projected to increase by 24% from the previous quarter to 691.9 billion KRW, and hotel and leisure sales are expected to rise by 12% to 106.5 billion KRW.

With rising vaccination rates domestically and internationally, easing of social distancing, expansion of flight routes, and concrete plans for implementing travel bubbles, Hotel Shilla is expected to benefit. Researcher Park said, "As the burden related to the movement of peddlers and overseas travelers decreases, duty-free store sales will increase and lodging demand will recover," adding, "While sales growth at downtown duty-free stores continues, the strength of sales recovery in airport duty-free stores and the hotel and leisure sectors will gradually become stronger."