[Click eStock] "Solid Growth Throughout the Year... Shinsegae Target Price Raised to 850,000 Won"

On June 24, Meritz Securities announced that it has raised its target price for Shinsegae to 850,000 won.

Joungwook Kim, an analyst at Meritz Securities, projected that Shinsegae will maintain solid growth throughout the year, driven by an increased proportion of luxury goods in its department stores, a rise in foreign visitors to Korea, and favorable exchange rates. Kim noted that while annual depreciation expenses are expected to increase by about 3.5 billion to 4 billion won compared to the previous year, these costs are concentrated in the first half and should ease in the second half. He also predicted that the duty-free segment will see a full-scale improvement in its profit structure.

Accordingly, by applying an estimated 2027 earnings per share (EPS) of 53,125 won and an appropriate price-earnings ratio (PER) of 16.0 times, the target price was raised to 850,000 won. Kim explained, "The growing share of inbound foreign sales among the three major department store companies is becoming a structural growth driver, which is reflected in the revaluation phase of the 12-month forward PER for the retail sector." The previous day, Shinsegae shares closed at 672,000 won.

According to previously released results, Shinsegae's total sales in the first quarter amounted to 3.2144 trillion won, and operating profit reached 197.8 billion won, up 11.7% and 49.5%, respectively, compared to the previous year. This represents an earnings surprise that exceeded market consensus.

Kim analyzed, "The full-fledged effects of the flagship store renewal and the sharp increase in sales to foreign customers led to a 13% high growth in total department store sales, creating operating leverage and driving company-wide performance." Despite a sharp increase in airport rent, the duty-free (DF) segment also turned a profit of 12.9 billion won as discount rates were reduced and the average transaction value improved.

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