[Click e-Stock] "Shinsegae Expected to Achieve Record-High Results This Year... Target Price Raised"

On May 14, NH Investment & Securities revised its target price for Shinsegae upward from 420,000 won to 570,000 won, projecting that the company will achieve record-high results this year. The investment opinion remains "Buy."

Joo Younghoon, an analyst at NH Investment & Securities, stated, "We raised our target price by 35.7% compared to the previous target, reflecting a combination of revised department store estimates, increased duty-free business value, and the expanded value of equity holdings including Samsung Life Insurance (2.2%)." He added, "Since Shinsegae is expected to deliver its highest-ever earnings this year, we believe the stock price can easily surpass its previous high, and despite the share price increase, the pace of earnings improvement remains steep, maintaining the stock's valuation appeal."

In the first quarter of this year, Shinsegae recorded sales of 1.8471 trillion won, up 10.9% year-on-year, and operating profit of 197.8 billion won, up 49.5%, beating market expectations. Joo analyzed, "Same-store sales for department stores exceeded 20%, marking the highest figure in the industry. Sales from foreign customers increased by 90%, clearly demonstrating the company's benefit from the rise in overseas visitors to Korea." He added, "Although depreciation expenses increased after store renewals, resulting in somewhat limited operating profit growth, profitability indicators are expected to improve further in the second half of the year when the base effect evens out."

The duty-free business also returned to profitability with operating profit of 10.6 billion won. Joo noted, "While there was a cost increase due to the end of airport rent reduction benefits, profitability improved as a result of reduced discount rates at downtown stores. Following Shinsegae's withdrawal from the Incheon Airport DF2 area, we expect profit to increase significantly starting in the second quarter."

Share buybacks and cancellations are also anticipated. Joo pointed out, "As Shinsegae holds the largest proportion of treasury shares (7.2%) among retail companies, there is further potential for an upward adjustment in corporate value if share cancellations are carried out in the future."

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