Duty-Free Shop Stocks Continue to 'Soar' This Year as Well

Solid Performance and Expectations for Hanhanryeong Easing... Double-Digit Growth Anticipated

On the 7th, with winter rain falling, Chinese peddlers (Daigou) and foreign tourists are waiting to enter in front of a duty-free shop in Jung-gu, Seoul. / Photo by Moon Honam munonam@

[Asia Economy Reporter Geum Bo-ryeong] There is a forecast that duty-free store operators can have a smooth path this year.

According to the Korea Exchange on the 7th, the closing price of Hotel Shilla was 94,900 KRW, which is an 18.33% increase compared to 82,000 KRW on October 7 last year, three months ago. During the same period, Shinsegae rose 20.83%, and Hyundai Department Store rose 11.7%. Compared to the KOSPI's 6.6% increase during this period, these are remarkable figures.

One of the reasons duty-free store operators are thriving is their performance. The duty-free market in the fourth quarter of last year is estimated to have grown by 32% compared to the previous year. Sales to Chinese customers increased by more than 40% as demand from individual travelers as well as traditional Chinese traders increased. According to KB Securities, Hotel Shilla is expected to have consolidated sales of 1.4573 trillion KRW and operating profit of 50.5 billion KRW, which are increases of 22% and 84% respectively compared to the previous year.

Park Shin-ae, a researcher at KB Securities, analyzed, "With Hotel Shilla's product sourcing competitiveness maximized, downtown store sales are expected to grow by 22% this year," adding, "The stock price will attempt an additional rebound while confirming the growth rate of the domestic duty-free market in the first quarter of this year." Hi Investment & Securities also estimated that Shinsegae Duty Free's sales will grow by 29% year-on-year, supported by an increase in foreign sales.

The expectation of easing the 'Hanhanryeong (Korean Wave ban)' is also an element that anticipates additional performance and stock price momentum for duty-free store operators. Chinese President Xi Jinping may visit Korea in the first half of this year, and there is a plan to designate next year as the 'Year of Korea-China Cultural and Tourism Exchange' to mark the 30th anniversary of Korea-China diplomatic relations. Ha Jun-young, a researcher at Hi Investment & Securities, said, "Duty-free sales are expected to achieve double-digit growth again this year," adding, "Since there is a high possibility that the Hanhanryeong will be lifted in line with President Xi's visit to Korea, the estimated growth rate of duty-free sales will be revised upward."

Cosmetics-related stocks that sell well at duty-free stores are also considered beneficiaries. Amorepacific was traded at 221,000 KRW as of 10:15 a.m. on the day, up 6.76% (14,000 KRW) from the previous day. Korea Kolmar and Tony Moly also rose 4.17% (1,900 KRW) and 4.41% (450 KRW) to 47,500 KRW and 10,650 KRW, respectively.

This content was produced with the assistance of AI translation services.