[Click e-Stock] "Shinsegae Passes Earnings Trough... Target Price Raised to 250,000 Won"

Yuanta Securities raised its target price for Shinsegae to 250,000 won on the 30th, anticipating a rebound in performance.

Lee Seungeun, a researcher at Yuanta Securities, stated, "In the second half of the year, several factors are expected to drive improved results, including consumption-boosting policies, the removal of duty-free liquor bottle limits, and a recovery in demand from Chinese tourists. Shinsegae is expected to stand out as a structural beneficiary, as it operates both department stores and duty-free shops."

He added, "Since the beginning of this year, the entire retail sector has undergone a revaluation in share prices. This appears to be due to the increased appeal of dividends and asset value amid external uncertainties, as well as heightened expectations for shareholder returns."

Shinsegae's sales for the second quarter are projected to reach 1.624 trillion won, up 1.2% year-on-year, while operating profit is expected to decrease by 29% year-on-year to 83.5 billion won. The main reasons for the weak performance are increased fixed costs at department stores and continued losses at duty-free shops.

Lee predicted, "In the second half of the year, department store sales are expected to grow by 2-3% due to the base effect and a recovery in consumer sentiment, with gradual improvement in operating profit as well. While duty-free shops will continue to face the burden of airport rent, a recovery in downtown sales and improved cost efficiency are expected to narrow losses. Consolidated operating profit in the second half is expected to show a clear recovery trend compared to the same period last year."