April 20, 2024

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[THE INVESTOR] Hotel Shilla is showing a strong upturn in earnings and its stock price momentum will garner attention, said Meritz Securities on April 13, maintaining a “buy” recommendation and raising the target price to 125,000 won (US$116.74) from 110,000 won.

Its revenue in the first quarter will hike 20.8 percent on-year to 1.23 trillion won and operating profit will surge 158 percent to 25.8 billion won, beating market consensus, said analyst Yang Ji-hye.

Sturdy sales at downtown duty-free stores and opening new stores at Incheon and Hong Kong airports will significantly boost its growth, explained the analyst, adding that growing online purchases in China and cut in lease at Incheon’s first terminal will improve its operating profit.

Younger, middle-class Chinese are increasingly spending on luxury goods through online sellers whose main source of purchase is duty-free stores, brightening earnings prospect of Hotel Shilla, forecast Yang. 

Robust earnings growth, increasing market share and bidding for new stores will maintain its high valuation, underlined the analyst. 

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