[THE INVESTOR] Hotel Shilla’s earnings will improve as tourists from China return to Korea, said KTB Investment and Securities on Nov. 30, raising the target price to 68,000 won (US$62.90) from 39,000 won.
Although the restriction on tour packages is yet to be fully lifted, its fourth-quarter revenue from duty-free stores will maintain growth as private “shuttle traders” and individual visitors offset the slow sales from lack of group tourists, said analyst Kim Yeong-ok.
Hotel and leisure division is improving room occupancy rate, and the rate will further advance from year-end effect, she noted.
Boosted by the return of Chinese tourist and PyeongChang Winter Olympics, Hotel Shilla’s revenue next year will rise 14.9 percent on-year to 4.68 trillion won and operating profit by 77 percent to 150.5 billion won, forecast the analyst.
Its current stock price, however, is 43.6 times its price-earnings ratio and is not highly attractive in terms of valuation, added Kim, maintaining an “underweight” recommendation.
By Hwang You-mee (firstname.lastname@example.org)