[Click eStock] "Shinsegae, Consumer Economy Slowdown 'Boritgogae'... Target Price Down"

Target Price Lowered from 190,000 KRW to 170,000 KRW

Daishin Securities on the 6th downgraded the target price for Shinsegae from 190,000 KRW to 170,000 KRW, citing a continued decline in profits through the first half of this year due to a contraction in consumer spending. The investment rating was maintained at 'Buy.'

Shinsegae reported consolidated total sales of approximately 3.1874 trillion KRW in the fourth quarter of last year, up about 2% year-on-year. However, operating profit plunged 48% to 106 billion KRW, falling about 30% short of market expectations (150 billion KRW). Yujeonghyun Yoo, a researcher at Daishin Securities, explained, "Due to weak consumer demand and a late warm spell in October, sales of high-margin fashion products were sluggish, resulting in a -1% growth rate for existing department store locations in the fourth quarter of last year."

One-time costs such as airport rent for duty-free shops, which widened the operating loss in the fourth quarter of last year, remain a burden. Researcher Yoo stated, "In particular, the rent burden from the expansion of duty-free shop operating space at airports is expected to continue for the time being, so performance improvement is likely only in the second half of the year," adding, "The stock price is expected to remain sideways for the time being amid a lack of upward momentum."

IBK Investment & Securities also lowered its target price from 220,000 KRW to 180,000 KRW, anticipating only modest improvement in Shinsegae's performance this year. Nam Seonghyun, a researcher at IBK Investment & Securities, said, "We expect profitability to improve due to the withdrawal from the duty-free business and easing competition with 'Dai Gong' (parallel traders)," but noted, "The consumer environment is likely to remain weak, and depreciation expenses and poor performance of major subsidiaries (Shinsegae Inter) are expected to continue." Shinsegae's consolidated sales for 2025 are projected at 6.6855 trillion KRW, a 1.8% increase year-on-year, with operating profit rising 4.7% to 502 billion KRW.