[Click e-Stock] "Global Tax Free Hits Record Domestic Performance... Now Targeting Japan's 600 Billion Won Market"

As Global Tax Free continues to show improved performance driven by a rise in foreign tourists visiting Korea, the company is accelerating its expansion into overseas tax refund markets, including Japan. In particular, with Japan scheduled to fully implement its post-refund system in November, a new market is expected to open, leading analysts to predict that overseas business could become a key driver of mid- to long-term growth.

According to SK Securities on September 8, Global Tax Free posted consolidated sales of 46.9 billion won and operating profit of 9 billion won in the second quarter of this year. Sales grew by 17.2% and operating profit by 8.2% compared to the same period last year. The operating margin hit a new quarterly high of 19.3%.

Despite the termination of the refund policy for beauty and plastic surgery, new categories such as cosmetics, department stores, and pharmacies offset the decline in existing segments. Sunjae Heo, an analyst at SK Securities, stated, “If we exclude the one-time impact of the termination in beauty and plastic surgery refunds, actual growth rate for the second quarter reaches as high as 46.5%,” adding, “As we move into the peak season in the second half, we expect results to improve in a low-first-half, high-second-half pattern.”

The foundation for domestic business growth is also being strengthened. Global Tax Free’s domestic commission revenue is influenced by both the number of inbound tourists and commission revenue per tourist, with both key indicators simultaneously improving.

From January to June of this year, the number of foreign tourists visiting Korea reached 10.71 million, up 21.4% from the same period last year. Of these, Chinese tourists increased by 27.1% to 3.21 million, while Taiwanese tourists rose by 33.4% to 1.15 million.

Not only has the number of tourists increased, but commission revenue per tourist is also on the rise. For Chinese tourists, who account for 41% of total commission revenue, per capita commission sales rose from 7,009 won in the second quarter of 2024 to 9,094 won in the second quarter last year, and further to 9,423 won in the second quarter of this year.

Heo added, “Both the quantitative indicator of inbound tourist numbers and the qualitative indicator of per capita commission revenue are improving at the same time,” commenting, “The underlying profit strength of the domestic business has now stepped up to a new level.”

Going forward, market attention is expected to shift toward overseas operations. Japan is the most closely watched market, as the country will implement the post-refund system in full starting November 1. SK Securities projects this will create a new annual tax refund market in Japan worth between 300 billion won and 600 billion won.

Global Tax Free plans to target the Japanese market in partnership with Planet, the world’s second-largest provider in the sector. By combining Planet’s luxury brand network—including Gucci, Balenciaga, and Saint Laurent—with Global Tax Free’s existing local infrastructure, the strategy is to secure an early lead in the burgeoning market.

Japan is considered an attractive market in terms of both the number of foreign tourists and consumption volume. If the company successfully enters the market, the number of foreign tourists visiting Japan is about twice that of Korea, and consumption levels are three times higher, raising expectations that overseas business could outperform domestic results.

Global Tax Free is currently securing merchants at major airports, major retail chains, and luxury brands. Initial sales are expected to be reflected from the fourth quarter of this year, with full-year contributions forecast for next year.

Singapore and Thailand are also cited as prospective markets for new growth. Bidding processes are expected to commence in both countries in the second half of this year, and should Global Tax Free be selected as an operator, substantial contributions to results could begin as early as next year.

In Singapore, business scope may expand from in-store and airport refund operations to a centralized system covering refund approval and settlement. In Thailand, despite its annual number of inbound tourists being about twice that of Korea, the tax refund infrastructure remains in an early stage, which suggests significant growth potential.

SK Securities forecasts that Global Tax Free will record sales of 172 billion won and operating profit of 32.6 billion won this year, representing growth of 11.6% and 12.5%, respectively, compared to last year. Excluding the base effect of last year’s termination of the beauty and plastic surgery refund policy, the underlying revenue growth rate is estimated to be around 40%.

Heo stated, “While the growth of domestic operations will continue this year, from next year the headwinds from the base effect of the terminated beauty and plastic surgery refunds will be resolved, and overseas operations will begin to be reflected in results in earnest,” adding, “The company’s growth trajectory is expected to expand further going forward.”

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