[Click eStock] Hotel Shilla, Target Price Lowered to 90,000 Won Due to Delay in Chinese Group Tours

On the 10th, Korea Investment & Securities downgraded the target price of Hotel Shilla by 10% from 100,000 KRW to 90,000 KRW, citing a delayed recovery in Chinese group tours and the duty-free store market. The investment rating was maintained at 'Buy.'

Myungjoo Kim, a researcher at Korea Investment & Securities, explained, "Since the recovery of Chinese group tours and the duty-free store market is progressing more slowly than expected, we have reflected this by lowering the 2024 net profit forecast by 10.1%."

However, it is expected that Chinese group tours to Korea will increase around the second quarter. Researcher Myungjoo Kim said, "While Hotel Shilla's stock downside is solid, there remains upside risk, so it is acceptable to approach at the current stock price level without burden," adding, "The recent strengthening of the yuan against the dollar is positive for Hotel Shilla."

Hotel Shilla's consolidated sales for the fourth quarter of last year amounted to 1.0414 trillion KRW, and operating profit was 4.2 billion KRW, which is expected to fall short of market expectations by 7.5% and 74.6%, respectively. This is believed to be due to the clearance of aged inventory (carryover, obsolete, or depreciated value stock) in the duty-free division (TR) of Hotel Shilla in the fourth quarter, following the third quarter.

Researcher Myungjoo Kim analyzed, "It is estimated that the inventory held by Hotel Shilla consisted mainly of products purchased by daigongs (itinerant traders) rather than products preferred by group tour customers," and added, "Although the clearance of aged inventory that occurred in the fourth quarter following the third quarter of 2023 is regrettable, it was a necessary process."

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