Daeshin Securities reaffirmed its Buy rating and target price of 1 million won on Shinsegae (ticker: 004170) on the 15th. The stock currently trades at 705,000 won.
Second-Quarter Outlook
Daeshin projects Shinsegae's Q2 consolidated gross revenue at 3.2957 trillion won (up 14% year-on-year) and operating profit at 161.3 billion won (up 114%).
Same-store sales growth in the department store division is forecast at +26% for Q2 on a management basis. Sales to foreign customers are expected to accelerate from 90% growth in Q1 to more than 110% in Q2.
Shinsegae DF, the group's duty-free subsidiary, is forecast to swing to operating profit, driven by rising FIT (fully independent traveller) sales and an expansion of permanent retail floor space at airport outlets. Shinsegae International is also expected to return to profit, supported by buoyant domestic fashion consumption.
Annual Earnings Trajectory
On an annual basis, Daeshin projects Shinsegae's operating profit will reach 802 billion won in 2026, representing a 67.2% increase year-on-year, with further growth to 902 billion won anticipated in 2027.
Investment Thesis: The Japan Parallel
Daeshin argues that "given the rising global popularity of K-culture and the trend of a weaker won, the growth in foreign visitor sales is likely to persist for the foreseeable future." The brokerage draws an explicit parallel with the Japanese retail sector: "Just as Japanese department stores underwent a corporate revaluation between 2023 and 2024 on the back of surging inbound foreign spending, Shinsegae is poised for a similar reassessment of its intrinsic value alongside improving earnings."
Share Price Performance
Shinsegae's share price has risen 311.1% over the past 12 months. Its 52-week high stands at 714,000 won, against a 52-week low of 161,200 won.