[Click eStock] "Hotel Shilla Posts Loss in Q4 Last Year... Hopes for Recovery in 2021"

[Asia Economy Reporter Oh Ju-yeon] Eugene Investment & Securities forecasted that Hotel Shilla's fourth-quarter performance last year would result in a loss due to the resurgence of the novel coronavirus (COVID-19). However, from a stock price perspective, it is a time to focus more on the recovery expectations for 2021 rather than regrets about the fourth quarter, maintaining a 'Buy' investment rating and a target price of 100,000 KRW.

According to Eugene Investment & Securities on the 4th, Hotel Shilla's fourth-quarter sales last year are expected to decrease by 41.9% year-on-year to 897.8 billion KRW, with an operating loss of 9.1 billion KRW. Initially, it was expected that the reduction in airport duty-free store rent would enable a return to profitability from the fourth quarter, but due to the COVID-19 resurgence, it is analyzed that it will take more time to recover operating profit.

Eugene Investment & Securities evaluated that, focusing only on Hotel Shilla's duty-free store segment, there was improvement compared to the third quarter. Although December sales decreased by about 40% year-on-year, the rent reduction effect for airport duty-free stores, which began in September, was reflected throughout the quarter, leading to possible improvement in profitability.

Researcher Joo Young-hoon said, "Although the city duty-free stores have recently seen an increase in the proportion of small-scale Daigongs, resulting in some increase in brokerage fees, it is understood that the operating profit remains in positive territory. The fact that the duty-free stores are maintaining this level of performance even in the worst conditions is certainly a positive factor."

The unexpected deterioration in profit and loss appeared in the hotel segment. The resurgence of COVID-19 led to the prohibition of private gatherings of five or more people and a 50% restriction on room reservations, which exacerbated difficulties.

Researcher Joo mentioned, "Normally, banquets and gatherings held during Christmas and year-end were also canceled, causing severe sales impacts across all segments including rooms, banquet halls, and restaurants."

However, if a full-fledged rebound begins starting with a return to profitability in the first quarter of this year, the stock price is also likely to rise, and the existing investment rating and target price were maintained respectively.

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