[Infostock Daily= Reporter An Hoe Hyun] Daishin Securities assessed on the 3rd that Shinsegae as a "section that nothing to lose now". The investment opinion 'BUY' and the target stock price remained at 270,000 won.
Shinsegae, which operates department stores and duty-free shops, posted an operating loss of 48.6 billion won in the second quarter of this year due to the influence of COVID-19, which turned into a year-on-year deficit. It is the first quarterly deficit since Shinsegae and E-Mart separated their affiliates in 2011. Sales also fell 32.64% year-on-year to just 1.0144 trillion won.
Daishin Securities judged that it is appropriate to approach Shinsegae's third-quarter trend and related department store sectors conservatively due to the influence of COVID-19's re-proliferation. The duty-free shop business is expected to see a significant improvement in losses regardless of the recovery in the number of customers due to the government's rent reduction.
"The growth rate of existing department stores, which had been on a double-digit increase in July to August, has shifted to a double-digit decline since mid-August due to a surge in the number of coronic in Korea," the company said and added, "However, despite the surge in the number of coronic, luxury goods saw their sales grow more than 40% year-on-year at the end of August, recording higher sales than in the second quarter." "However, it is appropriate to take a somewhat conservative approach to third-quarter gains and losses due to the sudden rise of COVID-19 in mid-August," the company explained.
Regarding the duty-free shop business, the company said, "The sales of duty-free shops in the city in the third quarter are about 30% less than the previous year, similar to the level in the second quarter," adding, "However, since the third quarter is the peak season for duty-free shops, it is understood that the sales are showing an improvement trend compared to the average monthly in the second quarter." In addition, as the third quarter reflects the effect of a reduction of 36 billion won in rent for duty-free shops at Incheon International Airport, and the government extended the deadline for reducing rents by item-specific rates until December 2021, the burden of gains and losses at duty-free shops in 2021 is expected to improve regardless of the recovery of duty-free shop traffic.
Reporter An Hoe Hyun ahh@infostock.co.kr
