[Edaily Reporter Kwon Oh Seok ] NH INVESTMENT & SECURITIES announced on the 12th that it is maintaining its “Buy” rating on SHINSEGAE INTERNATIONAL(031430)but lowering its target price from 21,000 won to 18,000 won.

Jeong Ji-yoon, an analyst at NH INVESTMENT & SECURITIES, stated, “Contrary to market concerns, sales growth for imported fashion and cosmetics in the third quarter remains solid even compared to the second quarter,” adding, “There is still room for improvement in the gross profit margin of the imported brand business once the decline in the exchange rate stabilizes.”
He further explained, “The current stock price (10,740 won as of the 11th) shows a significant valuation gap relative to the improvement in earnings, and we expect a gradual rebound in the stock price.”
On a consolidated basis, second-quarter revenue was 291.6 billion won (down 6% year-over-year), and operating profit was 7.0 billion won (returning to profitability), though operating profit fell 38% short of the consensus estimate. Analyst Jeong explained, “Excluding the Lifestyle (JAJU) segment from the same period last year, revenue grew by 15%, continuing the trend of profit growth,” adding, “Fashion (standalone) revenue reached 126.1 billion won (+33%), with operating profit at 4.7 billion won (return to profit), as growth rates for imported and in-house sales reached 32% and 51%, respectively.”
He continued, “Profitability improved due to strong sales growth across most imported brands, such as UGG, Brunello Cucinelli, and The Row,” adding, “Tom Boy recorded revenue of 36 billion won (-16%) and an operating loss of 500 million won (loss widened).”
For the Cosmetics division (separate reporting), revenue reached 114 billion won (+23%) and operating profit was 5.1 billion won (+155%), with growth rates for imported and in-house sales at 19% and 41%, respectively. Referring to the high growth of imported perfume brands and the turnaround in Vidivici’s performance, he added, “Amuse posted net sales of 13.4 billion won (-29%) and an operating loss of 600 million won (shift to a loss). Given the lingering base effect from large-scale shipments to H&B stores in the previous year and the impact of upfront investment costs in the first half, profitability is expected to improve in the second half as global sales materialize.”