April 20, 2024

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[THE INVESTOR] GS Home Shopping’s operating profit will continue to decline in the first two quarters, said Shinhan Investment on April 20, lowering the target price by 5.4 percent to 265,000 won (US$248.03).

Operating profit in the first quarter on a standalone basis will drop 25.4 percent on-year to 32.8 billion won, due to one-off profits reflected in the same period last year and hike in commission paid to cable system operators, said analyst Park Heui-jin.

A high baseline effect will also burden its second-quarter earnings, according to the analyst. In the second quarter last year, 2.8 billion won fine levied by Fair Trade Commission was returned, but excluding this, its operating profit declined only 2.2 percent, said Park. 

Although the target price has been lowered reflecting adjusted earnings estimate, considering that its valuation is 10.2 times its price-earnings ratio, with 600 billion won cash reserves, and its dividend rate is close to 4 percent, recommendation is maintained as a “buy,” added the analyst. 

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