[Click e-Stock] "Hotel Shilla Delivers Q1 Earnings Surprise... Target Price Raised"

Mirae Asset Securities Raises Hotel Shilla Target Price to 78,000 Won
Duty-Free and Hotel Businesses Deliver Earnings Surprise on Inbound Recovery

On April 28, Mirae Asset Securities raised its target price for Hotel Shilla from 60,000 won to 78,000 won, maintaining its "Buy" investment opinion, following the company’s first-quarter earnings surprise.

In the first quarter, Hotel Shilla posted revenue of 1.0535 trillion won, up 8% year-on-year, and an operating profit of 20.4 billion won, returning to the black. Mirae Asset Securities had previously forecast Hotel Shilla’s first-quarter revenue at 1.017 trillion won and an operating loss of 1 billion won.

The duty-free business saw significant improvement, with sales of 884.6 billion won (up 7%) and an operating profit of 12.2 billion won, also returning to the black. Sales at downtown stores rose to 353.1 billion won, up 12% from the previous year and 4% from the previous quarter. The downtown store margin is estimated to have increased in the high single digits. Delivery, according to Mirae Asset Securities’ analyst, said, "As demand has recovered, mainly in the retail sector, the proportion of high-margin customers has increased, and wholesale discount rates appear to have stabilized."

The company expects the Incheon Airport store to exceed the break-even point (BEP) in the second quarter, as the DF1 zone store was closed after April.

The hotel business reported revenue of 168.9 billion won (up 17%) and operating profit of 8.2 billion won (up 228%). By location, all sites recorded strong growth compared to the same period last year: 12% in Seoul, 24% in Jeju, and 17% in Stay, with average daily rates (ADR) also rising across all locations.

Analyst Bae commented, "We believe the improvement in inbound business conditions drove the earnings surprise." He added, "With structural growth in inbound tourism (foreign travelers visiting Korea), the peak season appears to have arrived earlier than usual, and we expect this trend to continue until the main inbound peak period."

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