[Edaily Reporter kyoungeun kim ] iM Securities announced that it is initiating coverage of Shinsegae Co.,Ltd(004170)—which is expected to be the biggest beneficiary of strong inbound consumption—by issuing a “Buy” rating and a new target price of 680,000 won. This represents a 71.5% upside potential relative to the current stock price (396,500 won).

Jang Ho, an analyst at iM Securities, stated in a report released today, “We forecast operating profit this year to reach 822.1 billion won, a 71.3% increase year-over-year,” adding, “We expect strong earnings growth in the department store segment.”
He explained that, as strong inbound consumption has been concentrated around the main store, the company has focused on the effect of high-end spending driven by store size and location.
The target price was calculated by applying a target price-to-earnings ratio (PER) of 14.1x to the 12-month earnings per share. This corresponds to the average PER of the four major Japanese department store chains.
Shinsegae Co.,Ltd’s regional foothold in Myeongdong is drawing attention as tourist spending and the number of visitors to Korea have recently surged significantly. In the second quarter, tourism spending averaged 2.1 trillion won per month, a 59.6% increase compared to the same period last year. This is attributed to improvements in the exchange rate, per-capita spending, and the number of visitors to Korea; in the medium to long term, the increase in visitor numbers is expected to drive structural growth in inbound tourism.
He stated, “As tourism trends shift toward ‘experiences,’ the spread of K-culture is acting as a catalyst for visits to Korea,” adding, “Department stores, as key hubs for K-shopping, are major consumption channels absorbing the expansion of inbound spending.”
He projected, “Net sales from foreign customers at the main store are expected to rise 94.8% year-over-year this year, contributing significantly to the department store’s overall growth.” Shinsegae Co.,Ltd.’s Main Store has been reborn as a store specializing in luxury consumption following a luxury brand renovation completed earlier this year, and analysts note that establishing mega-stores in areas with mature foot traffic enables sales leverage from existing locations.
Recently, large-scale performance bonuses were paid to executives and employees of the top two semiconductor companies, and it is believed that the resulting income effect could serve as another catalyst for expanding high-end consumption among domestic consumers. He emphasized that attention should also be paid to the possibility that these benefits will be concentrated around the “South City” store.