NH Investment & Securities announced on July 3 that it has raised its target price for Shinsegae from 660,000 won to 940,000 won, an increase of 42.4%, citing strong department store performance and a rise in foreign consumer spending. The firm maintained its "buy" rating on the stock.
Research analyst Joo Young-hoon stated, "The asset effect and the increase in foreign visitors are leading to a reevaluation in the department store sector, and this reflects the expanded value of holdings, including Samsung Life (2.2%)." He added that the department store industry is currently receiving the highest interest among non-semiconductor sectors in the KOSPI market, with Shinsegae at the forefront.
The firm also anticipates a significant improvement in Shinsegae's second-quarter performance. NH Investment & Securities projects consolidated sales of 1.7645 trillion won and operating profit of 155.1 billion won for the second quarter, representing a 105.9% increase year-on-year in operating profit.
Joo noted that the sales growth rate may appear somewhat low due to the closure of the DF2 duty-free area at Incheon International Airport, but he emphasized that this area had accounted for most of the duty-free operating losses, suggesting that the closure could actually serve as a rebound factor for operating profit.
He expects the department store business to drive performance improvements, estimating a 26% growth rate for existing stores based on managed sales. Joo highlighted that the asset effect and increased foreign sales, along with strong high-margin clothing sales, are expected to significantly boost operating profit.
Additionally, he mentioned that the positive performance of Shinsegae International and live shopping subsidiaries, driven by strong clothing sales, will also contribute to improved consolidated results.