April 18, 2024

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[THE INVESTOR] Shinsegae International’s first-quarter earnings will be surprisingly strong, said Korea Investment and Securities on April 11, maintaining a “buy” recommendation and raising the target price up 15.8 percent to 154,000 won (US$144.53).

Its revenue in the period will rise 13 percent on-year to 306 billion won and operating profit will surge 120 percent to 9.7 billion won, widely beating market consensus, said analyst Na Eun-chae.

Despite a varied effort to grow, its operating profit ratio has been 2-3 percent on average but cosmetics and online businesses are propelling the profit improvement, said the analyst. 

Annual revenue from cosmetics will leap to 160 billion won from last year’s 63 billion won and operating profit ratio to 15 percent from 9 percent. Operating profit from the sector will reach 24 billion won, accounting for 53 percent of the company’s overall profits, estimated Na.

The sharp improvement is mainly due to the surge in revenue from Vidi Vici brand, up to more than 100 billion won from last year’s 23 billion won, according to the analyst. 

Diversifying its business portfolio and sustaining its own brands, Shinsegae International’s investment is showing results, she added.

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