Heungkuk Metaltech Securities said on the 11th that Shinsegae has earnings momentum (upside potential) this year thanks to an improved high-end consumer goods market environment, and that expectations for the complex redevelopment of the Seoul Express Bus Terminal remain valid. The firm raised its target price to 460,000 won from 360,000 won and maintained a "buy" recommendation. Shinsegae's previous trading day closing price was 376,500 won.
Shinsegae posted consolidated total revenue of 3.4 trillion won and operating profit of 172.5 billion won in the fourth quarter last year. That was up 7.3% and 66.5%, respectively, from a year earlier. Park Jong-ryeol of Heungkuk Metaltech Securities said, "With positive asset effects continuing, the operating environment is favorable, including an increase in inbound foreigners and a recovery in consumer sentiment," adding, "By business division, operating profit growth at department stores led the way, while duty-free stores returned to the black and subsidiaries such as Central City and live shopping saw improved results."
Heungkuk Metaltech Securities also projected that this year's rapid stock market gains and rising real estate prices centered on the Gangnam area—positive asset effects—will translate into a consumption recovery led by affluent consumers.
Park said, "Solid performance at large luxury landmarks such as the Gangnam branch and the main branch, as well as a higher share of foreigner sales, will sustain healthy operating results," adding that for the duty-free business, "the company decided to exit DF2 and is expected to pursue a profitability-focused operating strategy, including enhancing competitiveness centered on the online mall."
Heungkuk Metaltech Securities estimated that Shinsegae's consolidated total revenue this year will rise 2.8% from a year earlier to 12.3 trillion won, with operating profit up 15.2% to 553 billion won.
Park said, "Shinsegae is reviewing the introduction of quarterly dividends this year, and of its treasury shares, 200,000 shares (2.1%) are slated to be canceled within the year, suggesting a continued re-rating of the stock through strong results and enhanced shareholder returns."