[Click eStock] "Global Tax Free, Expectation of Chinese Inbound Visitors"

NH Investment & Securities analyzed on the 31st that Global Tax Free is expected to see an influx of Chinese visitors, projecting a turnaround in its performance this year.

Global Tax Free is the leading tax refund agent in the domestic market, holding about 60% market share. It operates the tax refund agency business for domestic taxes for foreign tourists.

By refunding the value-added tax (10%) on domestic consumption by foreign tourists, it recognizes revenue by charging a commission on a portion of the refund amount (about 30% of the VAT, approximately 3% of the supply value). It has major shopping destinations popular with foreigners as its affiliates, including Shinsegae (Main Store, Gangnam Branch), Lotte Department Store (Main Store, Jamsil Branch), Hyundai Department Store (Main Store, The Hyundai), and Olive Young.

Researcher Kang Kyung-geun of NH Investment & Securities stated in the report that “Thanks to the recovery of foreign tourists and improvement in the profit structure, quarterly performance turned around in the fourth quarter of last year,” adding, “Since the second half of last year, the number of arrivals and average monthly commission sales have increased, centered on non-Chinese tourists, and the profit structure improved due to workforce slimming during the COVID period (184 employees at the end of 2019 → 91 employees at the end of 2022).”

Researcher Kang explained, “Global Tax Free’s performance is linked to the number of foreign tourist arrivals and their consumption scale, and performance growth is expected to be remarkable this year,” noting, “Last year’s average monthly arrivals were only 3.8% for Chinese tourists and 25.8% for non-Chinese tourists compared to 2019, indicating ample room for further performance growth.”

He analyzed, “The government announced a policy to revitalize foreign tourism to Korea on the 29th, including visa system improvements (expanded KETA accessibility, transit visa waiver), and plans to increase major flight routes (Chinese routes from 63 flights per week in February to 954 flights per week in September), which is expected to boost foreign tourist activity. In particular, the recovery of Chinese tourists is a key factor, with the resumption of short-term visa issuance from China and the lifting of PCR test requirements since February, and the planned expansion of Chinese flight routes from the end of March being important points.”