[Click eStock] "Shinsegae Has Passed the Darkest Period"

Yuanta Securities Issues 'Buy' Investment Opinion and Sets Target Price at 330,000 KRW... Closing Price on 12th at 244,000 KRW

Shinsegae Department Store Yeongdeungpo Branch (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Bo-ryeong] An analysis has emerged that Shinsegae's performance, affected by the novel coronavirus infection (COVID-19), has passed its darkest phase.

According to Yuanta Securities on the 13th, Shinsegae's consolidated total sales for the first quarter recorded 1.8448 trillion KRW, with an operating profit of 3.3 billion KRW. These figures represent decreases of 20.5% and 97%, respectively, compared to the previous year. The operating profit fell far short of the consensus estimate (42.2 billion KRW).

The department store division posted total sales of 836.5 billion KRW and an operating profit of 22.6 billion KRW, down 12.7% and 57.7% year-on-year, respectively. The duty-free store recorded sales of 488.9 billion KRW and an operating loss of 32.4 billion KRW. Sales decreased by 30.5% compared to the previous year, and operating profit dropped by 45 billion KRW. The average daily sales across all stores in the first quarter were 8.3 billion KRW, but there was a significant monthly difference: 12.5 billion KRW in January, 7 billion KRW in February, and 5.3 billion KRW in March.

However, the worst situation is considered to have passed. Lee Jin-hyeop, a researcher at Yuanta Securities, stated, "In the case of department stores, as the spread of COVID-19 has subsided, a turnaround is underway with March as the bottom. Of course, we need to closely monitor the additional spread originating from Itaewon recently, but growth has resumed as of May." He added, "Although the visibility of recovery in the duty-free sector itself remains low, the Korea Customs Service's allowance of domestic and international distribution of duty-free goods and the reduction of rent by Incheon International Airport Corporation have helped set a floor for performance."

Yuanta Securities gave Shinsegae a 'Buy' investment rating with a target price of 330,000 KRW. The closing price on the 12th was 244,000 KRW.

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