[Click e-Stock] "Strong Performance Like Samsung Electronics and Nix... But Valuation Lags Behind"

Heungkuk Securities has lowered its target price for Hotel Shilla from 80,000 won to 65,000 won, while maintaining a buy recommendation.

On July 2, Park Jongryeol, a researcher at Heungkuk Securities, stated, "Earnings estimates for this year and next year are expected to rise, but the 12-month forward price-to-earnings ratio (PER) is 14.7 times and the price-to-book ratio (PBR) stands at 1.6 times, so the valuation appeal is not high." He added, "There is a need for the company to both announce a more proactive shareholder return policy going forward and to make active efforts to enhance corporate value."

For the second quarter of this year, consolidated sales are expected to be 1 trillion won, down 0.9% year-on-year, while operating profit is projected to reach 50.6 billion won, up 484.7% during the same period, indicating solid performance. Park explained, "This is due to the low base effect from last year, robust profit generation in the hotel and leisure businesses, and the turnaround to profitability in the duty-free segment."

For the full year, consolidated sales are expected to rise 0.8% year-on-year to 4.1 trillion won, and operating profit is projected to surge 1,226.4% to 179.2 billion won. Park pointed out, "After withdrawing from the Incheon Airport duty-free store, the easing of rental burden and the increase in the number of inbound foreign visitors, among other favorable business conditions, as well as profitability-focused discount rate management, are expected to further improve the profitability of the duty-free business." He continued, "The upward trend in hotel occupancy rates and average room rates should also drive continued performance improvement." However, he added, "It is disappointing that despite the sharp increase in inbound foreign visitors through May, duty-free sales remained almost flat."

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