[Click eStock] "Shinsegae Not Greatly Affected by the 4th Wave of COVID-19"

Rising Vaccination Rates... Increased Sales Expectations at Airport Duty-Free Shops
Kiwoom Securities "Maintains Shinsegae Target Price at 440,000 Won"

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Amid the resurgence of COVID-19, it has been analyzed that Shinsegae is not significantly affected. Both department stores and duty-free shops are showing a recovery trend contrary to concerns.

On the 8th, Kiwoom Securities maintained its investment opinion of "Buy" on Shinsegae, with a target price of 440,000 KRW. The closing price on the previous day was 275,000 KRW.

The impact of the fourth wave of COVID-19 appears to have little effect on department store sales. The consumer sentiment index for July and August remains above the baseline of 100 points, while the vaccination rate is also increasing. As of the previous day, the first dose vaccination rate in Korea surpassed 60%. Additionally, the newly opened Daejeon branch on the 27th of last month is expected to have an initial customer attraction effect. Accordingly, Kiwoom Securities forecasts Shinsegae's department store division's combined operating profit for the third quarter to increase by 67% year-on-year to 52.3 billion KRW.

(Provided by Kiwoom Securities)

Daily sales at duty-free shops are expected to exceed 10 billion KRW again. The retail sales data for Chinese cosmetics in July, announced in mid-last month, showed some weakness. The year-on-year growth rate of Chinese retail sales, which exceeded 40% earlier this year, fell below 10% in July. However, as the market enters the peak season ahead of China's National Day, demand is showing signs of recovery.

Park Sang-jun, a researcher at Kiwoom Securities, said, "It is also a positive factor that the major economically active population in Korea will complete their second COVID-19 vaccination within this year," adding, "Since Shinsegae operates the largest duty-free shop area at Incheon International Airport, sales recovery is expected to be strongest during the upcoming overseas travel demand recovery phase."

He also stated, "Due to concerns over the fourth wave of COVID-19, Shinsegae's valuation (stock price relative to performance) burden has been significantly eased," and added, "Department store sales are on an upward trend, and with the rise in vaccination rates, expectations for demand recovery at airport duty-free shops remain valid, so it should be utilized as a buying opportunity at a low price."

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