[Edaily Reporter Kwon Oh-seok] Hyundai Motor Securities announced on the 18th that it is maintaining its “Buy” rating on #Hotel Shilla and raising its target price from 59,000 won to 70,000 won.

Kim Hyun-seok, an analyst at Hyundai Motor Securities, stated, “In the first quarter, the duty-free segment achieved an operating profit for the first time in seven quarters, driven by improved profitability at downtown stores and the reflection of rent reductions at overseas airport duty-free shops—which had been deferred from the fourth quarter of last year.” “Starting in the second quarter, profitability is expected to improve in earnest due to rent savings resulting from the withdrawal from the DF1 zone at Incheon International Airport and the termination of the contract for the Macau International Airport store,” he added.
He explained, “While it is true that foreign tourists’ shopping channels are diversifying, we view the increasing share of Chinese tourists—the main customers of downtown duty-free stores—as a positive factor,” adding, “Although the share of Chinese tourists among all foreign tourists had declined to around 5% in 2022, it has expanded to about 30% as of the first quarter.”
Furthermore, he predicted, “If the yuan remains strong in the second half of the year, it will have a positive impact not only on top-line growth but also on profitability.”
Regarding the hotel sector, he forecast that conditions favorable to inbound (visits to Korea) demand would continue. Analyst Kim emphasized, “Since the second quarter of 2021, the number of inbound foreign tourists has been increasing year-over-year for 20 consecutive quarters,” adding, “As the weak won trend also persists, inbound demand from foreign tourists is expected to remain robust in the second half of the year, and conditions favorable to the hotel sector will continue.”
He added, “Consequently, we expect the Shilla Stay division, which caters to foreign tourist demand, to maintain high room occupancy rates in the second half of the year, and the average room rate is also expected to continue rising.”