April 27, 2024

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[THE INVESTOR] Shinsegae has secured a sustainable growth momentum by acquiring Casamia, said Shinhan Investment on Jan. 25, maintaining a “buy” recommendation and 390,000 won (US$366.37) target price. 

The retail heavyweight has announced that it will take over 92.35 percent stake in the home furnishing company for 183.7 billion won.

Casamia’s revenue in 2016 was 122 billion won with operating profit of 9.3 billion won, and considering the price-earnings ratio of domestic furniture makers and the management control premium, the merger amount is sensible, said analyst Park Heui-jin.

Although the direction for the brand should be reaffirmed, the acquisition is positive in that Shinsegae has laid grounds for further growth, and Casamia will expand, from its current 72 outlets, noted the analyst. 

Meanwhile the retailer’s earnings will remain on an upturn on the back of strong duty-free sector, according to Park. Daily revenue from its downtown duty-free store has risen to 5 billion won this year, from mid-four billion won in fourth quarter last year, and factoring in the opening of an outlet at the airport and acquisition of Casamia, its stock has ample room to grow, added the analyst.

By Hwang You-mee (glamazon@heraldcorp.com)