[Click e-Stock] "Lack of Momentum in Duty-Free Industry... Hotel Shilla Price Target Cut 11%"

Korea Investment & Securities lowered its price target for Hotel Shilla by 11.1% on Oct. 29, citing a lack of momentum in the duty-free industry.

In a report on Hotel Shilla released that day, Korea Investment & Securities maintained its “Buy” rating but cut its price target from KRW 63,000 to KRW 56,000. The move followed a downward revision to earnings estimates amid weaker-than-expected conditions in the duty-free industry. Hotel Shilla closed at KRW 36,500 the previous day.

Hotel Shilla’s third-quarter operating profit, reported earlier, was KRW 55.2 billion, 4.3% below the market consensus. “The duty-free division’s operating profit was somewhat disappointing because of the off-season impact on daigou (Chinese purchasing agents) and a deterioration in the cost ratio due in part to the strengthening won,” said Kim Myung-joo, an analyst at Korea Investment & Securities.

The analyst said the company is unlikely to deliver an earnings surprise in the second half comparable to that in the first half. “Unlike in the first half, the duty-free industry has not recovered in the second half, and demand from daigou has not rebounded in September and October despite the November Singles’ Day shopping festival approaching,” Kim said. “We also estimate that the number of individual tourists has not increased from the first half, despite healthy inbound tourism momentum.”

“Unfortunately, there is currently no momentum in the duty-free industry,” Kim said, forecasting that “it will take time for Hotel Shilla’s share price to recover.”

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