Kiwoom Securities on the 4th said department store revenue at Shinsegae will continue to grow. It kept a Buy rating and raised the target price to 320,000 won from 300,000 won. The previous trading day's closing price for Shinsegae was 248,500 won.
Park Sang-jun, a researcher at Kiwoom Securities, said, "Backed by solid domestic consumption, the effects of large-store renewals, and rising demand from foreign tourists, department store sales in the fourth quarter this year will exceed market expectations."
Park projected Shinsegae's fourth-quarter operating profit on a consolidation basis this year at 178.3 billion won, up 72% from a year earlier. That is 14% above the market consensus of 156.2 billion won.
Park judged that domestic consumption is recovering based on several indicators. First, since on the 6th, Korea's consumer sentiment index has been moving around 110 points. The department store sales growth rate released by the Ministry of Trade, Industry and Energy also recorded 12% in Oct.
He also said the foreign customer sales growth rate has accelerated compared with the first half of this year. Park said, "In the second half of this year, the foreign sales growth rate at Shinsegae Department Store was 78% in Sep. and 60% in Oct., an accelerated trend compared with the first half."
Park expected this growth to continue next year. Park said, "Next year, foreign sales are likely to trend higher as multiple factors coincide, including increased inbound tourism demand driven by the K-content boom, stronger purchasing power among foreigners due to a weaker won, and spillover benefits from political tensions between China and Japan."