[Click eStock] "JTC to Grow Beyond Record Earnings... Irrational Concerns Present Buying Opportunity"

On June 16, SK Securities stated that irrational concerns regarding JTC should be viewed as a buying opportunity.

For the 2024 fiscal year (ending in February), JTC posted sales of 308.6 billion KRW, up 15.8% year-on-year, and operating profit of 47.5 billion KRW, up 117.1% year-on-year, achieving its best results since the COVID-19 pandemic. The company’s strong performance is attributed to the sharp increase in the number of foreign tourists visiting Japan, which drove JTC’s rapid sales growth.

In fact, the number of foreign visitors to Japan last year exceeded 36.8 million, reaching an all-time high, and the cumulative number of arrivals through April this year stood at 14.4 million. If this trend continues, the annual number of foreign tourists is expected to surpass 45 million.

Na Seungdoo, a researcher at SK Securities, commented, “Although the company’s scale has not yet returned to pre-pandemic levels, operating profit has reached an all-time high due to improved workforce efficiency and higher margins from increased sales of private brand products. This demonstrates a clear improvement in the company’s fundamentals.” He added, “This positive trend is expected to continue this year.”

However, JTC’s stock price entered a correction phase in June. There are two main reasons for this. The first is concern over the possibility of a major earthquake in Japan, which has reportedly led to an increase in tourists canceling their travel plans. Regarding this, Na explained, “Excessive concerns have been reflected in the stock price due to unpredictable natural disasters, which are difficult to forecast.”

The second concern is the potential abolition of the tax-free shopping system for foreign tourists. While it is true that the Japanese government is reviewing a revision of the system, this measure is intended to prevent duty-free goods from being indiscriminately distributed within Japan, and it is considered unlikely that the government will implement an extreme measure such as a complete abolition of the tax-free system for foreigners. Na advised investors to maintain a positive outlook, stating, “Stock price corrections caused by irrational concerns are likely to present buying opportunities.”

Meanwhile, the ‘Osaka Expo’, a global event, opened in April and will continue until October, boosting tourism demand in Japan. In addition, June 22 marks the 60th anniversary of the normalization of diplomatic relations between Korea and Japan, raising expectations for improved bilateral relations. The gradual recovery in spending power among Chinese tourists is also expected to be a positive factor for JTC.

Na emphasized, “The external environment surrounding JTC is very positive,” and stressed the need for an unwavering perspective that is not swayed by excessive concerns over external variables, alongside the company’s continued earnings growth.