[Click eStock] "Shinsegae International, Suitable for Long-Term Low-Price Buying"

[Asia Economy Reporter Oh Ju-yeon] KB Securities evaluated Shinsegae International as one of the stocks that could see the steepest rise in stock price if the domestic duty-free market recovers in 2021, although short-term earnings uncertainty still exists.

Shinsegae International's consolidated sales for 2021 are expected to reach 1.4598 trillion KRW, and operating profit is forecasted at 75.7 billion KRW, representing increases of 10% and 154% respectively compared to the previous year. The growth in sales and profits is attributed to the cosmetics and domestic apparel sectors.

The domestic apparel segment (including Tomboy) is expected to see a 10% sales growth and a reduction in operating losses, supported by improved department store traffic and a low base effect. The cosmetics segment is projected to achieve 24% sales growth (39% domestically, 10% imports) and an operating profit of 57.5 billion KRW, a 76% increase from the previous year.

However, earnings weakness is expected to continue through the fourth quarter of this year.

Shinsegae International's consolidated sales for Q4 are estimated to decline by 4% year-on-year to 381.6 billion KRW, with operating profit decreasing by 38% to 13.4 billion KRW.

Cosmetics sales are expected to fall by 1%, with operating profit at 9.6 billion KRW (down 29% year-on-year). Domestic apparel (including Tomboy) sales are projected to drop by 17%, with an operating loss of 2.7 billion KRW.

Researcher Park Shin-ae explained, "Sales turned to growth in October, but apparel consumption shrank again in November due to the escalation of social distancing measures."

Imported apparel sales are expected to grow by 4%, and daily necessities (Jaju) sales by 3%.

Researcher Park added, "It is difficult to expect earnings momentum until the end of the year, but the current price level is suitable for buying at a low price from a mid- to long-term perspective."

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