[Edaily Reporter Kwon Oh Seok ] Hana Securities announced on the 29th that it is maintaining its “Buy” rating and target price of 45,000 won for HotelShilla(008770).

Park Jong-dae, an analyst at Hana Securities, stated, “Profitability in the duty-free segment is stabilizing, and the hotel business continues to post strong results. The key factor is the potential for further ADR (average daily rate) growth, and rates at the Seoul branch and Stay properties are expected to rise steadily through the first half of 2027.” He added, “Hotel prices remain nearly 30% lower than those in Singapore and Tokyo. “While Seoul’s appeal as a tourist destination has risen sharply, ADR has not risen proportionally due to price resistance,” he analyzed.
He went on to emphasize, “It is clear that the slowdown in duty-free store growth, the onset of the fourth-quarter off-season, and the decline in the exchange rate are weighing on earnings and the stock price. However, given the hotel business’s strong competitiveness and growth potential, the scope for further valuation declines is limited.”
Previously, third-quarter consolidated revenue stood at 959 billion won (down 6% year-over-year), while operating profit reached 55.2 billion won (up 382%), posting solid results in line with market expectations (57.9 billion won). In the duty-free segment, revenue fell by 10% due to the impact of the off-season at Daigo. Although the rent burden for the Incheon Airport store increased compared to the second quarter, operating profit for the Incheon Airport store remained at the second-quarter level (estimated at approximately 12 billion won) as brand compensation payments were brought forward from the fourth quarter to the third quarter.
He said, “The hotel and leisure segment posted an operating profit of 27.9 billion won (+27%), once again setting a new record for the highest quarterly operating profit in history, following the second quarter. This was largely driven by a rise in ADR of more than 10%.”
The increase in flights to China in the fourth quarter is positive, but its impact remains to be seen. The weakening exchange rate continues to weigh on costs. While the high turnover rate in the cosmetics category significantly alleviates the burden of rising costs, the fashion category—which typically carries inventory for more than three months—continues to put pressure on the cost ratio.
Analyst Park noted, “Looking at the breakdown of duty-free categories in the third quarter, cosmetics accounted for 57%, fashion 27%, watches and jewelry 9%, and alcohol 7%. Additionally, as overseas airport stores enter their off-season, the burden of rent is increasing.” He added, “The turnaround in domestic sales growth since August is positive. In the hotel business, revenue may increase quarter-over-quarter due to year-end corporate events, but profitability is likely to decline due to the rising proportion of low-margin operations (banquets)," he added.