[Click eStock] "Hotel Shilla, a joint destiny with China's economy... Target price lowered"

Slow Recovery in Domestic Duty-Free Market
Q3 is Off-Season for Duty-Free Industry
Market Expectations Low, Stock Price Decline Likely Limited

On the 29th, Korea Investment & Securities evaluated that the stock price rebound of Hotel Shilla will be determined by the recovery of the Chinese economy. Accordingly, they maintained a 'Buy' investment rating and lowered the target price to 65,000 KRW.

Myungjoo Kim, a researcher at Korea Investment & Securities, stated, "The consolidated sales for the second quarter increased by 15.7% year-on-year to 1.0027 trillion KRW, while operating profit decreased by 58.9% to 27.6 billion KRW, falling 16% short of market expectations."

Researcher Kim explained, "As of the first half of this year, over 50% of Hotel Shilla's domestic duty-free sales come from wholesale (ttaigong) sales. Recently, with the sustained strong dollar, it is difficult to expect a meaningful recovery in duty-free sales driven by domestic consumers. Therefore, Hotel Shilla's stock price will depend on the recovery of the Chinese economy."

The market had already anticipated Hotel Shilla's sluggish performance. This is because the recovery of the Chinese economy is slower than expected, and the sales recovery of the Korean duty-free industry is also progressing slowly.

Researcher Kim forecasted, "The third quarter is traditionally the off-season for the duty-free industry, so it is difficult to expect significant improvement compared to the second quarter. Since investors' expectations are very low due to Hotel Shilla's poor performance, the stock price decline following the second quarter results will not be substantial."

He added, "There is still a concentration of supply and demand in the Korean stock market and within consumer goods, so the full-scale stock price recovery of Hotel Shilla is expected to occur when the recovery of the Chinese economy becomes visible."

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