[Click eStock] "Shinsegae Maintained at 'Buy'... Chinese Tourists Expected to Increase in Q2"

Kiwoom Securities maintained its "Buy" investment rating and target price of 450,000 won for Shinsegae, stating that the increase in inbound Chinese travelers (foreigners visiting Korea) is expected to strengthen further in the second quarter.

On March 16, Park Sangjun, a research analyst at Kiwoom Securities, said, "Considering seasonality and the Labor Day holiday, the 'Hanilryeong' spillover effect, which has been dispersed to Southeast Asia, is expected to be more concentrated in Seoul. The duty-free business is also expected to turn a profit in the second quarter, as rental expenses will decrease from May due to the return of the airport DF2 business license."

He also forecast that Shinsegae's first-quarter results would exceed market expectations. Park raised his estimate for Shinsegae's consolidated first-quarter operating profit to 15.56 billion won, an 18% increase. He added, "First-quarter same-store sales at department stores are expected to outperform our expectations, with management standards up 18-19% and accounting standards up 11%, while the duty-free business is likely to show better-than-expected profitability thanks to improved discount rates at downtown stores."

Additionally, the increase in middle-class consumption is expected to have a positive impact on first-quarter results. This is because, in addition to luxury goods, the growth in sales of the fashion segment is strengthening, thereby amplifying the operating leverage effect.

Furthermore, Park noted, "With the Hanilryeong spillover effect in full swing, it is encouraging that first-quarter foreign customer sales growth is expanding to the level of 80-90%."

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