[Click eStock] "Shinsegae Expected to Sustain Department Store Industry Growth... Target Price Raised"

Target Price Raised from 4.1 Million Won to 4.6 Million Won

On April 6, Daishin Securities raised its target price for Shinsegae from 4.1 million won to 4.6 million won, expecting continued growth in the department store industry this year. The investment opinion was maintained as 'Buy'.

Yoo Jeonghyeon, a researcher at Daishin Securities, explained, "The upward revision of the target price is due to the earnings forecast upgrade for 2026–2027. Despite concerns about consumer slowdown stemming from the prolonged war in the Middle East, the department store industry is expected to post solid growth this year." He added, "This is because the impact of the war on the asset growth of the middle- to upper-income class is likely to be only partial, and while overseas consumption is not expected to increase significantly due to the strong exchange rate, inbound tourism demand is likely to remain steady."

The domestic department store industry has entered a new phase of growth, driven by increased consumer spending power resulting from robust earnings among major Korean companies and a surge in inbound tourist sales. Researcher Yoo stated, "The recent price correction has increased Shinsegae's investment appeal," and assessed, "Now is a good time to buy."

For the first quarter of this year, all major business divisions are expected to show significant improvement, with no underperforming affiliates. Daishin Securities estimates Shinsegae's consolidated total sales and operating profit for the first quarter at 3.1622 trillion won and 153.1 billion won, respectively. These figures represent increases of 10% and 16% year-on-year. Researcher Yoo projected, "The department store same-store sales growth rate in the first quarter is expected to reach 13% based on accounting standards. Supported by positive consumer sentiment from asset effects, the high-margin domestic fashion category is estimated to have grown by 12%, resulting in significant operating leverage. The share of foreigner sales rose from 5.7% in the fourth quarter of last year to 7% in the first quarter this year, suggesting year-on-year growth of 80–90%," he explained.

Shinsegae DF appears to have sustained double-digit growth in duty-free daily sales, thanks to increased sales to free independent travelers (FIT) and the expansion of regular retail space at airport locations. Researcher Yoo said, "Despite the rise in airport rent, losses are expected to narrow more than anticipated due to increased sales at city locations and lower discount rates. Shinsegae International is also expected to post strong results across affiliates, with operating profit estimated to have soared from 5 billion won in the first quarter of last year to 12 billion won this year, driven by robust demand for fashion," he added.

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