[Click eStock] "Shinsegae, Biggest Beneficiary of N-Demic... Overseas Consumption Recovery Uncertain"

[Asia Economy Reporter Hwang Yoon-joo] Daishin Securities analyzed on the 12th that domestic consumption growth is expected to continue until the first half of this year for Shinsegae, but overseas consumption will take time to recover. Accordingly, they maintained a 'Buy' investment rating and a target price of 400,000 KRW.

Yoo Jung-hyun, a researcher at Daishin Securities, stated, "In April, Shinsegae Department Store's same-store sales growth rate increased by 20% compared to the same month last year, indicating that domestic consumption remains very strong despite the burden of high growth."

Researcher Yoo explained, "With the continued favorable consumption trend, Shinsegae will further widen the brand gap with competitors due to the ongoing effect of incorporating Gwangju Shinsegae in 2022 and the opening of the Daejeon branch."

In the first quarter, consolidated sales reached 2.8407 trillion KRW, a 31% increase year-on-year, and operating profit rose 58% to 191.6 billion KRW.

Looking in detail, excluding Shinsegae DF, the results were strong.

Researcher Yoo said, "On a separate basis, total department store sales increased by 13%," and explained, "In the first quarter, buoyant consumer sentiment and the endemic outlook led to a sharp increase in sales of luxury products and high-margin fashion."

Regarding Shinsegae International, he assessed, "Despite weakness in the cosmetics sector, sales of imported fashion and imported cosmetics performed well, resulting in operating profit of 33.1 billion KRW, exceeding our estimate of 26 billion KRW."

Daejeon branch/Gwangju Shinsegae explained, "The Daejeon branch, which opened at the end of August last year, continued its operating profit surplus trend in the first quarter, recording very favorable results compared to initial targets in the early stages of opening. Gwangju Shinsegae also saw total sales and operating profit increase by +8% and +9% respectively compared to the same period last year, significantly contributing to the consolidation effect."

They added, "Shinsegae DF recorded an operating loss of 2.1 billion KRW in the first quarter due to strengthened COVID-19 prevention measures in China and increased commission fees, resulting in a return to deficit."