Korea Investment & Securities, Shinsegae target price ↓… “Some of the department store industry’s momentum has disappeared.”

On the 11th, Korea Investment & Securities lowered its target stock price for Shinsegae [004170] by 22.6%, saying that some of the momentum in the department store industry has disappeared.

Previously, Shinsegae announced that its consolidated operating profit for the third quarter was 164.3 billion won. This is 3.9% below market expectations.

Regarding this, researcher Kim Myeong-joo said in the report, "It is true that department stores recorded good performance, but we believe that the operating profit leverage effect was weaker than market expectations due to the high growth of luxury goods with poor margins."

In particular, he pointed out, “It is unfortunate that the increase in foreign sales within the Shinsegae Department Store business has slowed due to the strong won and high base that has continued since July.”

At the same time, the investment opinion of 'buy' was maintained, but the target stock price was lowered from 530,000 won to 410,000 won. The closing price the previous day was 245,500 won.

Researcher Kim explained, “The applied multiple was lowered to reflect the fact that some of the department store industry’s momentum has disappeared due to the strengthening of the won and the decrease in the wealth effect of domestic residents.”

He said, "The company's current valuation is not burdensome, but since the sales flow of the department store industry in October was not good, we recommend keeping an eye on the industry's sales flow in November to see if industry momentum recovers."