[Click eStock] "Shinsegae, Department Store-Driven Strong Performance... Stock Price Rise Expected"

[Asia Economy Reporter Lee Jung-yoon] Korea Investment & Securities maintained a buy rating and a target price of 360,000 KRW for Shinsegae on the 10th, stating that stable sales growth in the department store sector and strong performance of subsidiaries such as Shinsegae International could lead to an increase in earnings per share (EPS) and a rise in the stock price.

Shinsegae's consolidated sales for the fourth quarter of last year amounted to 1.934 trillion KRW, up 43.9% year-on-year, and operating profit increased by 89.1% to 195.1 billion KRW. Korea Investment & Securities analyzed that both sales and operating profit exceeded expectations due to the strong performance of the department stores, with all categories including luxury goods showing growth.

Additionally, the operating profit of 12.3 billion KRW in the duty-free sector was considered a solid performance, taking into account increased patent fees due to changes in promotion expenditure methods and profitability decline caused by handling of aging inventory. However, it is estimated that the first quarter of 2022 did not benefit from the Chinese Lunar New Year effect due to strengthened quarantine and entry procedures following the recent Olympic Games held in China.

Despite last year's performance, Shinsegae's stock price recovery was sluggish, attributed to concerns over slowing growth rates in department stores and intensified competition within the duty-free industry. Kim Myung-joo, a researcher at Korea Investment & Securities, explained, "Since concerns about slowing growth rates in the department store industry and intensified competition in the duty-free market still exist, short-term valuation increases are difficult," but added, "Shinsegae department stores, which have high proportions of luxury sales, metropolitan area locations, and large stores, are advantageous in defending customer numbers."

Researcher Kim expected that stable sales growth in the department store sector and strong performance of subsidiaries such as Shinsegae International could lead to an increase in EPS and a rise in Shinsegae's stock price. He stated, "With a price-to-earnings ratio (PER) of 7.6 times in 2022, the valuation burden is also low, and additional negative factors within the industry are limited."

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