Kiwoom Securities Holds Target Price of KRW 70,000 for GS P&L, Upgrades Second-Half Profit Forecasts

Kiwoom Securities reaffirmed its "Buy" rating on GS P&L (KOSPI: 499790) on the 5th, maintaining a target price of KRW 70,000. That implies upside of 73.9% from the closing price of KRW 40,250 on the 4th.

GS P&L posted consolidated revenue of KRW 159bn and operating profit of KRW 29.4bn in the second quarter of its 2026 fiscal year (April–June), rises of 21.9% and 21.5% respectively from the previous quarter, and surges of 41.7% and 153.9% year on year. Both figures substantially exceeded market consensus.

The quarter absorbed a one-off property tax charge of KRW 13.8bn. Stripping that out, adjusted operating profit reached KRW 43.2bn — a figure that analysts note was achieved before the peak summer season had even begun, confirming the business can sustain quarterly earnings above KRW 40bn on an underlying basis. The Grand InterContinental Seoul Parnas recorded occupancy (OCC) of 92%, beating expectations, while its average daily rate (ADR) grew at a double-digit pace. Operating margin improved by 3.6 percentage points year on year, from 12.9% to 16.5%.

The Westin Seoul Parnas, which increasingly supplements room revenues with MICE (meetings, incentives, conferences, and exhibitions) business, also reached 92% occupancy, with ADR estimated in the mid-KRW 300,000s. At Parnas Hotel Jeju, ADR grew at a double-digit rate into the upper-KRW 300,000s, while the share of foreign guests expanded to between 20% and 30%. Ninetree, GS P&L's business-class hotel brand, maintained steady growth with ADR in the KRW 200,000s, up approximately 10% year on year.

Kiwoom Securities described the quarter's results as a textbook demonstration of fixed-cost leverage. In hotels, where fixed costs represent a large share of total expenses, once occupancy reaches capacity, almost all incremental increases in ADR flow directly through to profit. The conditions for that dynamic were in place during the second quarter: inbound tourist arrivals to South Korea rose 20% year on year, filling rooms to the brim while room rates rose simultaneously.

Kiwoom Securities reports that ADR growth momentum has continued into July. On this basis, it has raised its second-half operating profit forecasts by 11–15% above current market consensus. For the full year, it now projects 2026 operating profit of KRW 135.8bn, up 74% year on year, rising to KRW 167.1bn in 2027, a further 23% increase.

The 2027 outlook is particularly significant because of the expected end of renovation works at Parnas Hotel Jeju. From the third quarter onwards, the drag from rooms temporarily out of service will disappear, allowing the Jeju property to contribute fully to earnings. Kiwoom Securities calculates that even on conservative assumptions for inbound tourism growth, the post-renovation uplift alone is sufficient to deliver 10% revenue growth and KRW 167.1bn in operating profit in 2027.

The target price of KRW 70,000 is derived by applying a 30% discount to the average 12-month forward price-to-earnings (P/E) multiple of 34 times for four global hotel majors — Marriott, Hilton, InterContinental, and Hyatt — yielding a P/E of 18 times. Applied to the 2027 forecast earnings per share of KRW 3,918, this produces a fair value of KRW 70,516, rounded to a target of KRW 70,000.

Investors should nonetheless weigh several risks. The share price has fallen 37.7% from its 52-week high of KRW 64,600, reflecting a broad de-rating of hotel-sector valuation multiples as market flows have concentrated heavily in the semiconductor space. Kiwoom Securities acknowledges that upward revisions to its earnings estimates would ordinarily justify raising its target price, but has opted to hold the target steady in light of this sector-wide multiple compression.

Concerns have also been raised that higher fuel surcharges could dampen demand on long-haul routes to South Korea. Kiwoom Securities believes this fear is overdone: the proportion of American guests has actually been rising, supported by new customer acquisition channels and the favourable effect of a weaker Korean won on inbound travel costs. The impact will nonetheless depend on how US route demand and currency movements evolve.

GS P&L operates three five-star hotels — the Grand InterContinental Seoul Parnas (550 rooms), the Westin Seoul Parnas (564 rooms), and Parnas Hotel Jeju (307 rooms) — alongside five Ninetree business hotels and the Parnas Tower office complex in Seoul. GS Group and one other shareholder together hold a controlling stake of 58.6%. As of the 4th, GS P&L's market capitalisation stood at KRW 798.2bn, with foreign investors holding an 11.0% stake.