[Click eStock] "Shinsegae, Slow Recovery in Duty-Free... Declining Investment Interest in Korea's Domestic Industry"

Korea Investment & Securities issued a report on Shinsegae on the 22nd, expressing regret that the stock price has not kept pace with the solid performance, while maintaining a target price of 250,000 KRW and a buy rating.

Researchers Kim Myung-joo and Jeon Ye-won stated, "Shinsegae is expected to achieve strong results in the first quarter of this year following the fourth quarter of last year," adding, "However, the stock price has not recovered because of the slow recovery of the duty-free industry and decreased investor interest in the domestic Korean economy."

Shinsegae's consolidated sales for the first quarter are expected to be 1.5817 trillion KRW, with an operating profit of 166.7 billion KRW, both meeting market expectations.

Since the end of last year, as consumer demand for luxury goods has recovered, Shinsegae Department Store, which has a high proportion of luxury sales, has been the biggest beneficiary.

Shinsegae Department Store is expected to achieve a 9% same-store sales growth in the first quarter, with operating profit also increasing by 9.5% compared to the same period last year.

Sales in the duty-free industry are expected to be similar to the previous quarter, so the operating environment for Shinsegae's duty-free business is also judged to have been similar to the previous quarter.

Accordingly, operating profit is expected to be at the previous quarter's level, but considering the duty-free store license fee refunds in the first quarter, operating profit is estimated to reach 10.8 billion KRW.

If the dollar remains strong, the prices of products sold at duty-free stores become more expensive, so duty-free stores may offer additional discounts to consumers. Despite concerns about weakening consumer spending power, Shinsegae Department Store recorded high same-store sales growth in the first quarter, which is attributed to the polarization of consumption that has deepened since COVID-19 and the recovery in luxury goods demand due to the recent increase in the number of marriages.