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[Alpha Biz=(Chicago) Reporter Paul Lee] Yuanta Securities maintained its investment opinion in Hotel Shilla as "buying" and lowered its target stock price from 90,000 won to 80,000 won. It suggested that patience is needed for the time being, along with predictions that it will post lower-than-market expectations in the fourth quarter of last year.
"Hotel Shilla's sales in the fourth quarter of last year will fall 24.6% year-on-year to 979.9 billion won and operating profit of 14.2 billion won," Yuanta Securities said. "It will be below market expectations (sales of 1.727 trillion won and operating profit of 20.9 billion won)."
"Hotel Shilla's sales in the fourth quarter do not seem to have much performance momentum compared to the third quarter," Yuanta Securities said. "A lot of Daihome goods were ordered in the first half of 2022, but there is a large amount of goods that arrived at the time when they were classified as stock inventory in the third and fourth quarters of 2023, a year and a half later, and the impact is the biggest until the fourth quarter."
Yuanta Securities said, "The slow pace of recovery even after the Chinese group tour ban was lifted was due to the slow recovery of Korea-China flights and the lack of the number of visa issuing centers."
"Currently, these parts are being gradually resolved," Yuanta Securities said. "We have applied the lowest PER of 19 times by the fourth quarter as the cost ratio is expected to rise due to the exhaustion of stock inventory and the operating profit ratio is expected to fall due to increased fixed costs at Incheon International Airport Duty Free Shop."
AlphaBIZ 폴 리(hoondork1977@alphabiz.co.kr)
