[Click eStock] Shinsegae Inter, Target Price Lowered but "Excessive Decline, Attractive Value"

[Asia Economy Reporter Lee Seon-ae] Yuanta Securities announced on the 20th that it maintains a buy rating on Shinsegae International but lowers the target price to 45,000 KRW. The target price reduction is due to an adjustment in the target multiple (Target PER 13x→11x, P/E Band average). However, it evaluated that the stock has an attractive valuation due to the excessive price decline. Researcher Park Eun-jung of Yuanta Securities emphasized, "Although the target price is lowered, we still see significant upside potential within the sector due to differentiated growth."

Over the past three months, Shinsegae International's stock price has fallen by 19%, falling below a 12-month forward price-earnings ratio (PER) of 7 times. Concerns about economic slowdown, reduced disposable income leading to consumption contraction, and consumption dispersion due to the normalization of overseas travel have lowered investment attractiveness. However, domestic consumption shows a clear polarization phenomenon, with strong demand for high-priced overseas clothing and imported cosmetics. Accordingly, Shinsegae International is expected to continue strong profit momentum with double-digit sales growth in the third quarter following the second quarter. Researcher Park noted, "Differentiated growth and attractive valuation levels stand out."

Shinsegae International's third-quarter earnings are forecasted to achieve consolidated sales of 3.9 trillion KRW (+11%) and operating profit of 26.4 billion KRW (+87%). Solid performance is expected due to high growth centered on overseas clothing and imported cosmetics. Sales of high-priced product categories, overseas brands, and imported cosmetics are expected to grow by 17% and 18%, respectively.