[Click eStock] "Shinsegae Expected to See Significant Earnings Improvement Next Year... Target Price Raised"

On November 10, IBK Investment & Securities raised its target price for Shinsegae from 180,000 won to 250,000 won, expecting a significant improvement in next year’s earnings. The investment opinion was maintained as 'Buy'.

Nam Sung-hyun, a researcher at IBK Investment & Securities, stated, "We have raised the target price following an adjustment in earnings estimates," and explained, "We expect Shinsegae’s earnings to improve significantly next year, as the effects of Shinsegae Duty Free’s withdrawal from the Incheon Airport DF2 area are likely to materialize in earnest from the third quarter of next year. In addition, profit growth is expected as major department store renovations are completed, the Central Hotel division is projected to continue growing, and we see strong potential for increased efficiency following the restructuring of the Shinsegae International and Shinsegae Casa divisions."

On October 28, Shinsegae International decided to transfer the operations of its JAJU business division to Shinsegae Casa, effective January 1 next year. Researcher Nam commented, "Given the high synergy between the home goods and furniture divisions, this is a positive strategy."

In the third quarter of this year, Shinsegae recorded total consolidated sales of 2.8143 trillion won and operating profit of 99.8 billion won. These figures represent increases of 3.9% and 7.3%, respectively, compared to the same period last year. Nam analyzed, "Shinsegae’s third-quarter results overall met market expectations," adding, "As the sluggish performance in the first half gradually eased, the third quarter saw a return to growth." He continued, "However, looking at the overall picture, it is disappointing that profit in the department store division declined due to increased costs and limited growth at existing stores." While department store sales saw a slight increase, operating profit fell by 4.9% to 84 billion won due to cost burdens from major store renovations.

The growth in third-quarter performance was driven by key subsidiaries. Nam explained, "In the duty-free business, despite higher rent costs due to increased outbound travelers, the margin improved thanks to a greater proportion of free independent travelers (FITs) and a focus on profitability. In addition, profit contributions expanded due to the strong performance of the Central City Hotel division, and there was an increase in live shopping beauty and health supplement sales."

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