[Click e Stocks] "Hotel Shilla Solid Performance... Industry Recovery Needed"

[Asia Economy Reporter Myunghwan Lee] Korea Investment & Securities announced on the 3rd that it maintains a target price of 110,000 KRW and a buy rating for Hotel Shilla, stating that the company recorded solid performance last year.

Korea Investment & Securities evaluated that Hotel Shilla achieved solid results in all aspects last year. On a consolidated basis, Hotel Shilla's sales last year reached 1.1299 trillion KRW, up 34.2% compared to the previous year. Operating profit turned positive, recording 25 billion KRW. While sales slightly exceeded market expectations, operating profit fell slightly short of expectations. Looking at each business segment, the hotel division turned profitable compared to the same period last year due to improved occupancy rates. The duty-free division showed a sales growth rate of 36%, higher than the overall market growth rate of 11.9%.

It was estimated that the market competition intensity in the fourth quarter of last year was similar to that of the third quarter of the same year. Myungjoo Kim, a researcher at Korea Investment & Securities, said, "Due to strengthened quarantine and entry procedures in China ahead of the Beijing Olympics, it is estimated that the Korean duty-free industry did not benefit from the Chinese Lunar New Year effect in January," and expected little change in the market situation.

Korea Investment & Securities pointed out that short-term stock price recovery for Hotel Shilla would be difficult and that an overall industry recovery is necessary. Researcher Kim analyzed, "With the growth of domestic and foreign competitors and the fact that most of Korea's duty-free sales come from Chinese peddlers (ttaigong), the slowdown in Chinese consumer economy is also a risk factor," but added, "If COVID-19 does not worsen under the current circumstances, additional negative factors within the industry are limited, so the downside rigidity of the stock price is high."

He continued, "When overseas travel fully resumes, a stock price increase due to earnings per share (EPS) growth is sufficiently possible," and added, "Despite the difficulty in short-term stock price recovery, we maintain the buy rating and target price considering this."

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