[Click eStock] "Shinsegae International, Cosmetics and Online Sales Expected... Good Time to Buy"

DB Financial Investment Report

[Asia Economy Reporter Minji Lee] DB Financial Investment maintained a buy rating and a target price of 230,000 KRW for Shinsegae International on the 17th, expecting a recovery in performance next year driven by a rebound in the cosmetics division and strengthening of online channels.

Shinsegae International is estimated to record Q4 sales of 406.1 billion KRW, a 1.9% increase compared to the same period last year, while operating profit is expected to decline by 10.6% to 19.4 billion KRW. Hyunjin Park, a researcher at DB Financial Investment, stated, “Amid the recurring spread of COVID-19, the sales growth of overseas imported brands and imported cosmetics has been favorable, and sales in the duty-free channel are expected to gradually recover.”

It is also positive that resale demand, including daigong demand within the duty-free channel, is recovering across the industry. Sales of the VDL brand are also believed to have aligned with market trends. Sales in the cosmetics category on the company’s own online mall, SI Village, are estimated to have grown more than 3 to 4 times compared to last year.

The imported beauty and fashion brands that the company is currently strengthening are positioned at a high price point but represent a luxury contemporary line that is not entirely mainstream. Researcher Park explained, “In the COVID-19 era, characterized by high volatility in consumer sentiment, these brands have emerged as a form of compensatory consumption, and in the consumption environment that is shrinking again due to the nationwide spread of COVID-19, they are expected to serve as a small shield.”

The domestic fashion brand division is judged to be nearing the end of restructuring through the closure of inefficient stores, store relocations, and strengthening of online channels. The company plans to introduce a new sales method in the form of live commerce on its own online mall, which will be used as a distribution channel for both consigned and in-house brands.

Researcher Park said, “Currently, Shinsegae International is at a stage where it can add positive points from the effects of restructuring and the recovery trend in China and duty-free demand rather than reflecting additional negative factors. Although it is not yet a full recovery, confirming the bottom makes this an appropriate buying opportunity.”

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