[Click e-Stock] "Time to Buy Aggressively... Why You Should Invest in Shinsegae"

Heungkuk Securities has lowered its target price for Shinsegae from 930,000 won to 660,000 won while maintaining a buy recommendation.

On August 13, Park Jongryul, analyst at Heungkuk Securities, stated, "Despite raising earnings estimates for this year and next, we lowered the target price due to a multiple adjustment." He added, "With the recent sharp decline in the stock price, the 12-month forward price-to-earnings ratio (PER) and price-to-book ratio (PBR) stand at 7.7x and 0.8x, respectively, greatly increasing the stock’s valuation appeal."

Shinsegae's stock price has recently experienced a significant drop. After rising to 776,000 won on July 1, it plummeted to 428,500 won as of August 11. Park assessed, "Fears over a slowdown in the department store sector have been overblown due to the plunge in the stock market." He explained, "Even last month, Shinsegae’s department store sales grew by a solid 14.2%, and the contribution from foreign customers continues to increase steadily."

The company is also showing robust performance. In the second quarter of this year, Shinsegae's consolidated revenue was 3.1 trillion won, up 8.5% year-on-year. Operating profit surged 121.9% during the same period, reaching 167.1 billion won, far exceeding market expectations. Park noted, "Favorable factors such as a rise in inbound foreign travelers and recovering consumer sentiment contributed to strong results." He continued, "Growth in operating profit at the department store led overall performance, while improved profitability at the duty-free business, a turnaround at Shinsegae International, and earnings improvements at subsidiaries such as Central City also had a significant impact."

This strong business performance is expected to continue. Full-year consolidated revenue for this year is estimated at 13.2 trillion won, up 9.8% year-on-year, and operating profit is projected to rise 72.8% to 829.2 billion won over the same period. Park commented, "The duty-free business is expected to focus on profitability with strategies such as withdrawing from DF2 in April, strengthening FIT competitiveness through the online mall, and enhancing foreign customer attraction at downtown stores." He added, "Shinsegae International’s profitability will improve as it focuses on the recovery of consumption and on its strengths in beauty and fashion."

Shinsegae is also taking an active approach to shareholder returns. Park advised, "Shinsegae plans to gradually retire its remaining treasury shares," and recommended, "At the current price level, an aggressive buy strategy is warranted."

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