[Click eStock] "Shinsegae Inter, Fashion Leads and Cosmetics Push... Target Price Up"

[Asia Economy Reporter Kwon Jae-hee] Daol Investment & Securities maintained a 'Buy' rating on Shinsegae International on the 10th and raised the target price from the previous 48,000 KRW to 48,000 KRW.

Shinsegae International is expected to continue its high growth trend with strong performance in both fashion and cosmetics. Firstly, the fashion division's sales in the second quarter are projected to increase by 14% compared to the same period last year. In particular, department store fashion is expected to maintain a favorable operating environment for the time being. After the recovery of department store foot traffic in April and May, a high growth trend of around 20% has been recorded.

The effect of enhancing the brand power of Tomboy is also continuing. In the previous quarter, Tomboy's operating profit margin improved significantly, increasing by 11 percentage points compared to the same period last year. Tomboy's operating profit is expected to grow by 80% year-on-year this year, accounting for 55% of the profit share within the fashion division.

Along with the fashion division, the cosmetics division is also expected to continue its strong performance, exceeding expectations. Second-quarter sales are expected to increase by 5% year-on-year, with imported brands accounting for more than 80% of sales. This division is expected to achieve high growth of around 20% year-on-year, offsetting the weakness in in-house brands. Imported brands focus on high-margin categories, and the exchange rate environment is also favorable, making profitability improvement expected for the first time in a while.

Daol Investment & Securities analyst Baesong said, "Following the previous quarter, the fashion division's strength continues, and cosmetics also offset uncertainties by maintaining higher-than-expected growth centered on imported brands," adding, "Sales and operating profit are expected to turn to growth for the first time in three quarters."

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