Hankuk Securities announced on October 29 that Hotel Shilla needs to expand shareholder returns and actively enhance its corporate value to achieve a reevaluation of its stock price, lowering its target price to 50,000 won. The investment opinion remains a 'buy.'
Park Jong-ryul, a researcher at Hankuk Securities, stated in a report that Hotel Shilla recorded consolidated sales of 959 billion won and an operating profit of 55.2 billion won in the third quarter, showing solid operational performance, although it fell short of initial projections.
Park explained that the results were influenced by last year's low base effect, strong performance in the hotel and leisure sector (expansion in scale and profit), and the turnaround of the duty-free business into profitability. He noted that while the duty-free store at Incheon Airport saw a reduction in scale due to the closure of DF1, it achieved significant profitability due to reduced fixed costs and a focus on profitability.
He added that the hotel and leisure sector benefited from increased foreign demand, leading to improvements in average daily rates (ADR) and occupancy rates (OCC).
Regarding the fourth-quarter outlook, Park indicated that the positive business environment, including reduced rental burdens following the closure of the Incheon Airport DF1 store on April 16 and an increase in foreign visitors, would likely sustain profitability improvements in the duty-free sector through effective discount management focused on profitability.
He also noted that the trend of improving performance would continue due to rising hotel occupancy rates and average daily rates, but highlighted that the growth rate of duty-free sales remains low compared to the surge in foreign visitors.
* This article has been translated by AI.
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