Half-Doubtful About the Yooker Effect, the Outsider's Top Pick Is Hotel Shilla

Ranked No.1 in Net Purchases After Chinese Government's Announcement Allowing Group Tours to Korea
Operating Profit Expected to Recover to Pre-COVID-19 Levels...Preference for Domestic and Japanese Destinations Poses Challenges

With the return of 'Yukeo (Chinese group tourists),' foreign investors have been found to have purchased the most shares of 'Hotel Shilla' among all listed companies in Korea.

According to the Korea Exchange information data system on the 17th, from the 10th, when the Chinese government announced it would allow group tours to Korea for its citizens for the first time in 6 years and 5 months, until the previous day over 4 trading days, the top stock by net foreign investor purchases was Hotel Shilla. They bought a total of 98 billion KRW worth of shares. The net purchase scale gap was more than twice that of the second-ranked Hanmi Semiconductor (41 billion KRW). Paradise, which operates foreigner-only casinos, hotels, and resorts, followed with 33 billion KRW. Korean Air (24 billion KRW), cosmetics manufacturers Kolmar Korea (18 billion KRW), and Cosmax (18 billion KRW) also ranked within the top 15.

On the day of the Chinese government's announcement, the 10th, foreign investors purchased 73 billion KRW worth of Hotel Shilla shares in a single day. This is the highest net foreign purchase volume for a single stock since the Korea Exchange began compiling data. Hotel Shilla's stock price closed at 90,400 KRW the previous day, soaring 22.16% over four days compared to the closing price of 70,400 KRW on the 9th.

Hotel Shilla had continued a sluggish performance since the COVID-19 pandemic, recording a loss of 6.7 billion KRW in the fourth quarter of last year. However, it turned profitable in the first quarter of this year with 34.5 billion KRW and showed a rapid recovery by posting an operating profit of 67.2 billion KRW in the second quarter. Shin Young Securities estimated that Hotel Shilla's operating profit, which was 78.3 billion KRW for the entire last year, will more than triple this year to 257.3 billion KRW. This approaches the pre-COVID-19 level of 295.9 billion KRW in 2019. Next year, it is expected to surpass this with a record high of 310.8 billion KRW. The target stock price was also raised to 115,000 KRW. Seojeong-yeon, a researcher at Shin Young Securities, said, "Hotel Shilla has the capability to quickly source the most diverse and largest quantity of products when Chinese group tourists arrive," adding, "With profitability greatly improving, the effect of group tourist inflow is expected to lead to record-high profits."

However, there is also advice to be cautious as changes in Chinese travel and consumption patterns have been detected since the COVID-19 pandemic. First, Chinese people now prefer domestic travel over overseas travel. According to a recent Bloomberg survey of 1,055 Chinese respondents about their travel plans within the next three months, the largest 43% chose 'domestic travel.'

Moreover, competition with Japan to attract Chinese tourists could be an obstacle. Since 2017, the number of Chinese visitors to Japan has already surpassed those visiting Korea. Choi Seol-hwa, a researcher at Meritz Securities, said, "Even though group tours have reopened, it may take some time before a large influx of tourists follows," adding, "With the yen weakening, Chinese tourists are more likely to choose travel to Japan."

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