[Click eStock] "Shinsegae International, 4Q Earnings Below Expectations... Target Price Down"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities downgraded the target price of Shinsegae International from 310,000 KRW to 280,000 KRW on the 5th, following the company's fourth-quarter earnings last year that fell short of expectations. The investment rating was maintained at 'Buy.'

Lee Ji-young, a researcher at NH Investment & Securities, stated, "The fourth-quarter results fell short of expectations due to the sluggish domestic fashion sector," adding, "With changes in consumer trends intensifying the preference for overseas brands within fashion, it is expected that in-house brands will continue to struggle for the time being. Accordingly, we have significantly lowered the outlook for the fashion division and revised the annual earnings per share (EPS) down by 11%."

Shinsegae International recorded consolidated sales of 397.4 billion KRW and an operating profit of 21.6 billion KRW in the fourth quarter of last year. These figures represent increases of 9% and 21%, respectively, compared to the same period the previous year; however, the operating profit was 15% below consensus estimates. The researcher analyzed, "The main cause of the poor performance was the domestic fashion division," explaining, "Sales were sluggish due to a warm winter and the weakness of domestic brands within department stores, which led to inventory asset valuation losses and an operating loss estimated to be between 4 to 5 billion KRW."

The cosmetics division, which has a significant impact on the stock price, is expected to maintain its momentum. The researcher said, "Although performance is expected to remain weak in January and February due to the impact of the novel coronavirus (Wuhan pneumonia), events such as deferred demand occurrence, entry into Tmall's domestic mall, 'VDV' Asia promotions, the launch of the in-house brand 'Roybi,' and the introduction of additional imported brands are anticipated."

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