April 18, 2024

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[THE INVESTOR] Hotel Shilla’s stock will be able to rebound when concerns over sustainability of revenue from private shuttle traders ease, said KB Investment and Securities on Oct. 29 lowering the target price to 117,000 won (US$102.85) from 144,000 won.

Its stock price has tumbled 45 percent from the peak in June and 34 percent from the beginning of this month, bogged down by multiple concerns. They include decline in shuttle traders, slowdown of Chinese consumption, possibility of weakening yuan, deepening competition in commissions and sliding stock price index. As shuttle traders contribute more to its revenue worries are growing. More specifically, the possibility of stronger customs inspection at Chinese airports and shrinking e-commerce activities of sellers on WeChat, said analyst Park Sin-ae.

Hotel Shilla stocks will recover when investor sentiment on duty-free business and stocks related to Chinese consumers improve. Confidence in the fact that revenue from private proxy sellers will be maintained is crucial. Its earnings and market conditions, however, remain solid, she added maintaining a “buy” recommendation. 

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