Hotel Shilla, Smiling at China's Reopening but Struggling with Strengthened Quarantine Measures

After hitting the low point in November last year, rose 30% over two months
Target price raised amid expectations of improved profitability in duty-free business

[Asia Economy Reporter Kwon Jae-hee] Hotel Shilla, which had risen more than 30% over the past two months due to expectations of China's reopening, has come to a halt. This is attributed to strengthened quarantine measures for arrivals from China and profit-taking sales following a short-term surge. However, the securities industry is presenting a positive outlook, raising target prices amid expectations of improved profitability in the duty-free business.

According to the Korea Exchange on the 3rd, Hotel Shilla's stock price closed at 81,500 won, down 1.93% from the previous day. After hitting an intraday low of 60,600 won on November 4 last year, Hotel Shilla steadily rose to an intraday high of 85,000 won on the 28th of last month. This represents an increase of about 30% in two months. Due to the rapid rise in a short period, there was strong market expectation that Hotel Shilla's stock price would surpass the previous high of 85,600 won, but it closed lower for two consecutive days on December 29, the last trading day of last year, and January 2, the first trading day of this year. As of 9:02 a.m. on the 3rd, it is trading at 81,300 won, down 0.25% from the previous trading day.

The recent halt in the rapidly rising stock price of Hotel Shilla is analyzed to be due to strengthened quarantine measures for arrivals from China and profit-taking sales following the short-term surge. The Korean government strengthened quarantine for arrivals from China as the proportion of confirmed cases among overseas arrivals from China increased, and suspended short-term visa issuance at Chinese consulates. Kim Seok-hwan, a researcher at Mirae Asset Securities, analyzed, "Expectations for consumption recovery from China were priced in early, but the stock is showing weakness due to profit-taking sales following the short-term surge."

However, the securities industry still forecasts sufficient upside potential for Hotel Shilla's stock price. This is because benefits are expected from the favorable duty-free business. Korea Investment & Securities raised Hotel Shilla's target price by 15.7%, from 95,000 won to 110,000 won. Daishin Securities also raised its target price from 90,000 won to 115,000 won, and Samsung Securities raised its target price from 88,000 won to 95,000 won. Park Eun-kyung, a researcher at Samsung Securities, evaluated, "The demand outlook is unprecedentedly good," adding, "There is also a significant possibility of improved profitability at domestic and international airport duty-free shops, which had chronic deficits since 2014."

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