[Click eStock] Shinsaegae International's Spring Days, Target Price Raised

[Asia Economy Reporter Lee Seon-ae] Meritz Securities announced on the 13th that it maintains a buy rating on Shinsegae International and raises the target price to 50,000 KRW. With the current price at 33,400 KRW, the upside potential is 49.7%.

Hanuri, a researcher at Meritz Securities, emphasized, "Both sales performance and business strategy are excellent," adding, "Given the characteristics of domestic stocks and the attractive valuation, we recommend an active buy approach."

First, the apparel sector is benefiting from the With Corona effect, which is boosting clothing demand. Cumulative domestic apparel retail sales as of April 2022 are only 92% compared to the same period in 2019, indicating ample growth potential in the second half. Margin improvement through the withdrawal of inefficient brands is an added bonus. The cosmetics sector is accelerating the expansion of Swiss Perfection (OPM 45%). In the second half, new entry into Europe and expansion of domestic stores are planned. Attention is also needed despite the strong imports and the completion of the base effect for Vidi Vici.

Researcher Han stated, "Growth drivers based on portfolio diversification continue to be secured," and "New brand acquisitions in both cosmetics and apparel are expected to be confirmed in the second half."

Meanwhile, Shinsegae International recorded its highest quarterly profit with Q1 sales of 352.2 billion KRW (3.0% increase), operating profit of 33.1 billion KRW (55.6% increase), and net profit of 26.7 billion KRW (14.1% increase). The strong performance in apparel, improved cosmetics mix, and efficiency in self-operation all contributed harmoniously.