[Click eStock] "Shinsegae International, Q2 Earnings Disappoint Expectations... Target Price Down"

[Asia Economy Reporter Eunmo Koo] DB Financial Investment analyzed that Shinsegae International's second-quarter performance this year was worse than expected, but performance is expected to improve from the second half of the year. The investment opinion was maintained as 'Buy,' and the target price was lowered from the previous 260,000 KRW to 230,000 KRW.

Shinsegae International's consolidated sales for the second quarter of this year amounted to 287.2 billion KRW, a 4.8% decrease compared to the same period last year, and an operating loss of 2.5 billion KRW was recorded, falling short of market expectations. However, net profit reached 16.3 billion KRW, exceeding market expectations (8.1 billion KRW) due to the recognition of proceeds from the sale of Intercos shares. In the fashion sector, overseas brand sales increased by more than 10%, while domestic brand sales decreased by more than 13%, and cosmetics sales also dropped by more than 25%, totaling approximately 56 billion KRW.

On the 13th, Hyunjin Park, a researcher at DB Financial Investment, explained in a report, "In the case of overseas fashion brands, it is judged that they appropriately benefited from compensatory consumer sentiment triggered by the spread of COVID-19," adding, "Cosmetics showed steady sales in imports, but VIDIVICI's duty-free sales plummeted, and the decline in the proportion of high-margin channels appears to have caused the operating loss reversal."

The outlook is for an upward trend in performance in the second half. Researcher Park forecasted, "Fortunately, cosmetics duty-free sales are estimated to be recovering from July to August compared to April to June, so an improvement in cosmetics sales and operating profit is expected in the third quarter," and added, "Demand at local duty-free shops and online, including in Hainan, China, is likely to gradually improve, so the second-quarter performance was probably the bottom."

Furthermore, Researcher Park analyzed, "In the imported fashion and accessories sector, performance improvement is contributing as some duty-free products are increasingly sold domestically, and improvement in traffic at traditional domestic channels such as department stores will also enable performance improvement for domestic fashion and accessories brands," adding, "In addition, the company's online and mobile mall sales are steadily increasing, so expectations for performance recovery in the second half are quite high from the perspective of channel mix improvement."

Although the investment opinion was maintained as 'Buy,' the target price was lowered from the previous 260,000 KRW to 230,000 KRW. Researcher Park stated, "Since the second-quarter performance was worse than expected, lowering the target price due to annual estimate adjustments is inevitable," but added, "Expectations for performance recovery in the second half, especially in cosmetics and domestic fashion sectors, are relatively high, so the current stock price is seen as the bottom and considered a range where buying is possible."

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