April 25, 2024

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[THE INVESTOR] Shinsegae will grow in size as it expands its investments, including by opening a new duty-free store in the latter half, but profit growth will slow, said Meritz Securities on July 4, lowering the target price to 430,000 won (US$386) from 500,000 won.

Its second-quarter earnings will be strong on the back of solid growth of existing department stores and rallying revenues of duty-free stores, but in the second half its profits momentum will slow down significantly, said analyst Yang Ji-hye.

As it opens three more duty-free stores in the latter half, revenue in the third and fourth quarters will surge over 30 percent from the same period last year, but burdened by steep leases, operating profits will decline 2.8 percent on-year and inch up 0.8 percent in the fourth quarter, forecast the analyst. 

In the third quarter in particular, Shinsegae DF is likely to turn to the red with 5.1 billion won in operating losses from initial investments, and concerns will remain until figures can be calculated in the third quarter, she added, maintaining a “trading buy” recommendation. 

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