[Click e-Stock] "Shinsegae International Expected to See Performance Turnaround from Q3"

On June 19, SangSangin Securities analyzed Shinsegae International, stating, "From the third quarter, a turnaround in performance is expected as the company will benefit from an extremely low operating profit base, an increase in inbound tourism, and an improvement in domestic consumer sentiment." Accordingly, the target price was raised to 18,000 won, and the 'Buy' investment rating was maintained.

Kim Hyemi, a researcher at SangSangin Securities, projected consolidated second-quarter results of 319.5 billion won in revenue and 7 billion won in operating profit. In the first quarter, the company recorded 304.2 billion won in revenue and 4.7 billion won in operating profit. She explained, "The continued decline in performance since 2023 is the result of a combination of factors, including an overall slump in domestic consumption, the termination of distribution contracts with certain overseas fashion brands, and restructuring."

However, she predicted that "the negative growth trend will end during the second quarter, as profitability-oriented management strategies such as the expansion of new brands and improvement of product mix in the fashion and cosmetics divisions continue."

She anticipated a full-fledged recovery in performance starting in the second half of the year. The factors driving the recovery in the second half include: ▲sales growth in the overseas fashion division due to the expansion of major brand stores and improved product cost ratio resulting from a decline in exchange rates; ▲expectations for a recovery in domestic consumption in the domestic fashion division; ▲sales growth in the cosmetics division across department stores, duty-free shops, and H&B channels, as well as the impact of both proprietary and acquired brands such as 'Amuse', due to increased inbound tourism; and ▲improved product mix focused on fashion and new product sales following rebranding in the Jaju division.

Kim forecasted, "This year, Shinsegae International's revenue will remain at a similar level to last year, while operating profit will increase by 16%." She added, "Notably, the company's share price soared in 2018 when it entered the cosmetics business, and the operating profit of the cosmetics division accounted for a significant portion of consolidated results, rising sharply from 43.7 billion won in 2018 to 99.9 billion won in 2019. This year, driven by strong performance from existing proprietary brands and the newly acquired brand 'Amuse', operating profit in the division is expected to surge to 26.2 billion won, leading the company's overall profit recovery."

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