[Edaily Reporter Kim Kyung-eun] On the 10th, Kiwoom Securities raised its target price for #Shinsegae to 850,000 won, a 34.9% increase from the previous level, citing expectations that department store sales will exceed forecasts. The firm maintained its “Buy” rating.

Park Sang-jun, an analyst at Kiwoom Securities, stated in a report released that day, “Shinsegae is expected to demonstrate the strongest growth within the sector, driven by robust domestic consumer sentiment, increased sales to foreign customers, the renovation of large-scale stores, and high growth in the luxury goods segment.”

Shinsegae’s consolidated operating profit forecast for the second quarter was raised to 171 billion won, a 127% increase year-over-year. The annual operating profit forecast for this year was also raised to 816.9 billion won, a 70% increase from the previous year. In particular, the department store division is expected to see annual operating profit reach 560 billion won, a 38% increase year-over-year, as existing store sales continue to grow at a double-digit rate in the second half of the year.

Researcher Park explained, “As the domestic stock market continues to strengthen, the wealth effect is proving stronger than expected, and foreign sales are projected to more than double year-over-year, driven by factors such as the increase in Chinese inbound tourists.” He added, “In particular, considering the strong growth momentum relative to competitors—driven by the effects of large-scale store renovations and high growth in luxury goods sales—we have revised upward our forecast for second-quarter same-store sales growth at department stores to 25% (on a managed basis).”

He continued, “Given the favorable conditions in the department store sector, Shinsegae International and Central City are also expected to maintain a steady trend of profit growth.” He added, “Profits at duty-free stores are also projected to improve significantly compared to the previous quarter, driven by factors such as reduced rent at the Incheon Airport location.”

The strong sales performance of department stores is expected to continue in the medium term. Analyst Park stated, “The upward trend in stock indices is continuing due to the strong earnings of major domestic companies, and based on this year’s strong performance, the effects of incentive payments and wage increases by major companies are likely to be significant early next year.”

He added, “Due to the weak won and the lifting of the South Korea-Japan travel ban, the number of foreign tourists, particularly Chinese visitors, is increasing significantly, so the proportion of sales from foreign tourists is also expected to rise structurally.” He further noted, “In particular, Shinsegae is highly sensitive to the performance of its major subsidiaries due to the strong domestic consumer economy, so we expect strong momentum for company-wide earnings improvement.”