[Click eStock] "Shinsegae Inter, Earnings Estimates Lowered... Target Price Down"

[Asia Economy Reporter Hwang Yoon-joo] Hyundai Motor Securities announced on the 9th that it is lowering its earnings estimates for Shinsegae International. While maintaining a 'Buy' investment rating, the target price was lowered to 38,000 KRW.

Jeong Hye-jin, a researcher at Hyundai Motor Securities, stated, "We are lowering the earnings estimates (12-month forward) by 13% compared to the previous estimate."

Researcher Jeong explained, "It is expected that Shinsegae International will continue to incur investment-type expenses to diversify its business portfolio, strengthen its fashion brand portfolio, and enhance the growth potential of its own cosmetics. However, the favorable sales growth of high-margin overseas fashion and imported cosmetics is expected to effectively offset these costs."

Shinsegae International's operating profit for the third quarter was 24.2 billion KRW, a 37.6% decrease from the previous quarter, falling short of market consensus. Although sales growth in overseas fashion and imported cosmetics continued, the increase in expenses such as marketing for the cosmetics' own brand impacted the results.

Looking at the underperforming segments, in cosmetics, 'Swiss Perfection (PPA)' saw a 19% decrease in sales compared to the previous year due to adjustments in overseas wholesale volume and costs related to local staff recruitment. Operating profit sharply declined by 87.5% to 100 million KRW.

Sales in the lifestyle segment are estimated to have increased by 3.5% year-on-year to 69.5 billion KRW. The brand 'Jaju' is facing concerns over a slowdown in business conditions. Researcher Jeong stated, "We expect the company to focus on fashion categories with strong demand and respond to shrinking demand by launching new wellness stores."