[Click eStock] Hana Financial Investment "Shinsegae, Beneficiary of COVID-19 Vaccine... Target Price Up"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment forecasted a recovery in Shinsegae's performance in the first quarter of this year, focusing on its department store and duty-free shop businesses, and raised the target stock price to 340,000 KRW on the 24th, citing it as a beneficiary stock due to COVID-19 vaccinations.

Shinsegae recorded poor results in the fourth quarter of last year, with consolidated sales and operating profit decreasing by 24% and 47% year-on-year to 1.3403 trillion KRW and 103.1 billion KRW, respectively. The operating profits of the department store (separate) and duty-free shop (DF) fell by 28% and 96% to 61.7 billion KRW and 2.6 billion KRW, respectively, which was a major factor in the poor performance.

The department store's sales in December last year decreased by 12% compared to the previous year, which was decisive. The duty-free shop was able to turn a profit due to a reduction in rent at Incheon Airport. SI also saw a 20% decrease in operating profit (17.4 billion KRW) due to sluggish domestic fashion sales, and Central City recorded an operating profit of 17.5 billion KRW, down 7% year-on-year, due to a decline in hotel occupancy rates (31%). Casamia reduced its operating loss (-3 billion KRW) significantly as sales increased by 28%. Pre-tax profit was only 16 billion KRW, as asset impairment losses of over 60 billion KRW were reflected at locations such as the Hanam department store.

The first quarter of this year is expected to see a significant improvement in performance due to the base effect from last year's slump and recovery in consumer sentiment. Park Jong-dae, an analyst at Hana Financial Investment, stated, "Department store sales from January to February this year are understood to have increased by 20% year-on-year, and daily sales at duty-free shops have risen to 9 billion KRW (compared to 8 billion KRW in the fourth quarter)." He added, "Operating profit in the first quarter is expected to reach around 65 billion KRW, an increase of 1860% compared to the same period last year."

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