"This Year, Please"…Department Store and Duty-Free Shop Stocks Raise Expectations

Securities Firms Raise Target Prices for Shinsegae and Hyundai Department Store

Hyundai Department Store Pangyo Branch (Photo by Asia Economy DB)

[Asia Economy Reporter Geum Bo-ryeong] Department store and duty-free shop owners, who were hit hard by the COVID-19 pandemic last year, are raising their expectations this year.

According to the Korea Exchange on the 14th, the closing price of Hyundai Department Store was 80,500 won, up 10.27% over five trading days compared to the closing price of 73,000 won on the 6th. During the same period, Shinsegae rose 7.17%, from 237,000 won to 254,000 won.

Department stores and duty-free shops are representative industries that suffered from the adverse effects of COVID-19. Samsung Securities estimates Hyundai Department Store's Q4 performance last year at 765.9 billion won in sales and 85.4 billion won in operating profit. Compared to the previous year, sales increased by 25%, but operating profit decreased by 19%. Shinsegae is expected to record sales and operating profit of 1.34 trillion won and 86.1 billion won, down 24% and 56% respectively from the previous year. The duty-free sector is particularly severe, with estimated operating losses of 11.9 billion won and 2.3 billion won for Hyundai Department Store and Shinsegae, respectively.

However, the recent rise in stock prices is partly due to expectations that the impact of COVID-19 will lessen this year. There is a possibility of increased department store shopping, as well as relatively freer entry and exit for domestic and foreign nationals through global vaccination.

Lee Jin-hyeop, a researcher at Yuanta Securities, analyzed, "The department store industry is expected to turn around starting from Q1 this year, with Q4 last year being the last hurdle. The duty-free shops are likely to continue a trend of reduced losses compared to the previous quarter, supported by efforts to stabilize commission rates."

Brokerages have raised their target prices for these companies. Daishin Securities raised Hyundai Department Store's target price from 90,000 won to 100,000 won, and Samsung Securities raised it from 84,000 won to 103,000 won. For Shinsegae, NH Investment & Securities changed the target price from 270,000 won to 290,000 won, and Samsung Securities adjusted it from 305,000 won to 312,000 won.

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