[Click eStock] "Shinsegae, Earnings Recovery Expected Due to Industry Improvement"

[Asia Economy Reporter Eunmo Koo] DB Financial Investment analyzed that Shinsegae's earnings recovery is expected due to an improvement in business conditions. The investment opinion was maintained as 'Buy,' and the target price was raised from the previous 281,000 KRW to 290,000 KRW.

In the third quarter of this year, Shinsegae Department Store's sales on an individual basis decreased by 5.5% compared to the same period last year due to sales damage in August and September caused by the resurgence of COVID-19. Operating profit fell by 44.5% to 28.1 billion KRW. Due to poor performance of major subsidiaries such as Shinsegae Duty Free, Central City, and Shinsegae International, consolidated operating profit recorded a 44.5% decrease to 25.1 billion KRW.

On the 16th, Jaehun Cha, a researcher at DB Financial Investment, stated in a report, "Department store sales, which had been declining in August and September due to the resurgence of COVID-19, have recently shown signs of recovery. Operating profit for the department stores in the fourth quarter is highly likely to recover significantly. Duty-free sales are gradually recovering, and costs such as rent are decreasing, so the loss reduction in duty-free stores will also be substantial in the fourth quarter." He added, "Additionally, the performance of other subsidiaries is also escaping the worst phase, so the future earnings outlook is not bad."

The investment opinion was maintained as 'Buy,' and the target price was raised from the previous 281,000 KRW to 290,000 KRW. Researcher Cha explained, "Considering the slowly but expectedly improving performance in each sector such as department stores and duty-free shops, we raised the estimated earnings per share (EPS) for next year by 3% and slightly adjusted the target price."

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