"Hotel Shilla, Slow Duty-Free Sales Recovery... Target Price Lowered" [Click e-Stock]

On September 30, Heungkuk Securities lowered its target price for Hotel Shilla from 65,000 won to 55,000 won, citing sluggish duty-free sales recovery compared to the increase in the number of foreign visitors to Korea. The investment rating was maintained as 'Buy'.

Jongryul Park, a researcher at Heungkuk Securities, stated in a report on the same day, "Despite a positive business environment with the sharp increase in foreign visitors to Korea, the growth rate of duty-free sales has remained limited," adding, "For a full-fledged revaluation of the stock price, comprehensive efforts to improve performance and enhance shareholder value need to be pursued simultaneously."

Heungkuk Securities estimated third-quarter consolidated revenue at 979.8 billion won, down 4.5% year-on-year, with operating profit surging 455.1% to 63.5 billion won. Park explained, "Although the company saw a slight contraction in overall size due to the withdrawal from Incheon Airport’s DF1 store, the alleviation of fixed costs and a management strategy focused on profitability will lead to a significant turnaround to profit for the duty-free segment. The hotel and leisure division is also expected to demonstrate solid profitability driven by a rise in average daily rate (ADR) and occupancy (OCC) stemming from the growth in foreign tourists."

The company revised its annual consolidated revenue outlook for this year to 4 trillion won, down 1.6% compared to the previous year, and its operating profit to 198.4 billion won, a 1,368% surge year-on-year. Park noted, "Despite the recent decline in the share price, the forward 12-month price-to-earnings ratio (PER) and price-to-book ratio (PBR) stand at 13.8 times and 1.4 times, respectively, which means the stock’s valuation is not particularly attractive. To reverse the stock’s downward trend, aggressive initiatives to enhance corporate value and proactive shareholder return policies are needed together."

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