[Click eStock] "Hotel Shilla, 3Q Earnings Expected to Meet Forecast... Stock Price Recovery from 4Q"

Korea Investment & Securities maintained its 'Buy' rating and target price of 110,000 KRW for Hotel Shilla on the 11th, expecting the company's Q3 earnings to meet market expectations.

Myungjoo Kim, a researcher at Korea Investment & Securities, stated, "Hotel Shilla's Q3 revenue is expected to be 1.0163 trillion KRW, down 25.4% year-on-year, while operating profit is projected to increase by 154.8% to 67.9 billion KRW, both in line with market expectations. Although the duty-free business saw one-time gains in Q2, leading to an increase in Q3 duty-free sales compared to the previous quarter, operating profit is estimated to decline. The hotel segment is expected to continue its solid performance in Q3," he explained.

Hotel Shilla's stock price has recently been adjusting as the recovery of Chinese group tourists has fallen short of expectations. Researcher Kim said, "The stock price has declined by 17.7% over the past month, with particularly large drops around the Chuseok holiday. This is because, despite the Chinese holidays, the number of Chinese group tours visiting Korea did not significantly increase."

The slower-than-expected recovery of Chinese group tours is attributed to insufficient availability of rooms in domestic 3- to 4-star hotels and the limited number of flights between Korea and China, which keeps ticket prices high. Kim analyzed, "Although it is disappointing that the recovery of Chinese group tours during the Chinese holiday period did not meet market expectations, it is expected to gradually recover in Q4 with an increase in flights between Korea and China."

The stock price is expected to stabilize in the short term and recover from Q4. Researcher Kim said, "Uncertainties about the Chinese economy still exist, so further stock price adjustments or short-term sideways movement are anticipated. However, as the recovery of Chinese group tours gains momentum from Q4, the stock price is expected to rebound."

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