[Click eStock] "Shinsegae, Strong Performance Expected to Continue... Target Price Raised"

[Asia Economy Reporter Ji-hwan Park] Meritz Securities maintained a 'Buy' rating on Shinsegae on the 17th, citing solid performance in the fourth quarter of last year, and raised the target price by 2.9% to 350,000 KRW.

Yoonhee Choi, a researcher at Meritz Securities, stated, "The consolidated total sales for the fourth quarter of last year reached 3.0891 trillion KRW, a 38.7% increase compared to the previous year," adding, "Net sales were 1.8409 trillion KRW, up 37.0%, and operating profit rose 79.4% to 185.1 billion KRW." A record-high annual performance is expected. Last year's operating profit is projected to grow 473.4% to 507.3 billion KRW. This is thanks to the department store's solid performance combined with the duty-free shop's return to profitability.

The department store is expected to report total sales of 1.7385 trillion KRW (+37.6%), net sales of 625.4 billion KRW (+34.5%), and operating profit of 129.1 billion KRW (+80.1%). Researcher Choi said, "While growth centered on luxury goods continues, the recovery in fashion sales has contributed to margin improvement," adding, "The effect of consolidating the Gwangju corporation, which has a high operating profit of 19.4 billion KRW, was also reflected."

The duty-free shop is expected to have net sales of 799.5 billion KRW (+75.4%) and operating profit of 21.8 billion KRW (+737.5%). Researcher Choi noted, "The scale is similar to the previous quarter, but the business environment remains challenging, making margin erosion inevitable." He added, "In 2021, the department store sector saw a clear rebound consumption effect due to the low base from the previous year. Although this year presents challenges to performance growth, there is no problem with growth in the luxury category. However, additional growth potential in fashion appears limited."