IBK Securities said on the 10th that Shinsegae is expected to maintain solid growth this year. It raised its target price to 410,000 won from 360,000 won. Shinsegae closed the previous trading day at 355,000 won.
Nam Seong-hyeon, an analyst at IBK Securities, said, "While the rapid growth of the luxury category drove department store performance, the duty-free business returned to the black through a profitability-focused strategy," and noted, "Sales growth at the Shinsegae Central City hotel and higher rents at the Gangnam branch also contributed to the strong results in the fourth quarter of last year."
Shinsegae said its fourth-quarter revenue came to 1.9337 trillion won and operating profit to 172.5 billion won last year. The figures were up 6.2% and 66.5%, respectively, from a year earlier.
Nam said the favorable business environment is continuing, and the trend of earnings improvement is likely to persist this year. Nam said, "Store renewals, the recovery in inbound (foreign) tourism, and rising asset values are having a positive effect," adding, "Profitability improvement from the closure of the Incheon Airport DF2 store will be reflected starting in the second quarter of this year."
Nam added, "As strategies to strengthen the profitability of key subsidiaries take full shape, improvements are also expected in businesses outside the department store segment."