[Special Stock] Hotel Shilla, Duty-Free Division Profitability Declines... Down Over 8%

[Asia Economy Reporter Kwon Jae-hee] Hotel Shilla experienced a sharp decline in the early trading session on the 31st. This is interpreted as having a negative impact on investor sentiment due to the deterioration in profitability of the duty-free business revealed in the preliminary third-quarter earnings announcement.

As of 9:33 AM on the same day, Hotel Shilla's stock price on the KOSPI market was trading at 65,200 KRW, down 8.56% compared to the previous trading day.

Earlier, on the 28th, Hotel Shilla disclosed its preliminary consolidated third-quarter earnings, reporting sales of 1.3618 trillion KRW, a 41% increase year-on-year, and operating profit of 26.6 billion KRW, up 28% during the same period.

In particular, the duty-free sector showed significant weakness. The operating profit of the duty-free business fell by 97% to 600 million KRW.

Accordingly, securities firms are lowering their expectations for Hotel Shilla. NH Investment & Securities revised down its target price for Hotel Shilla from 100,000 KRW to 90,000 KRW.

Researcher Joo Young-hoon of NH Investment & Securities analyzed, "Although sales exceeded market estimates, profitability declined sharply, and especially the operating profit of the duty-free sector was very poor. It appears that a similar trend continued in October, making a decline in profitability of the duty-free business inevitable for the time being."