"Shinsegae International's Target Price Cut After Third-Quarter Results Fall Short of Consensus... 'Exchange-Rate Stabilization' Key"

[Financial News] NH Investment & Securities expects Shinsegae International's third-quarter results to fall below market expectations, weighed down by higher procurement costs for imported brands resulting from elevated exchange rates. The brokerage maintained its 'Buy' rating but lowered its target price from KRW 18,000 to KRW 16,000.
Jeong Ji-yoon, an analyst at NH Investment & Securities, said, "Shinsegae International's third-quarter consolidated revenue is estimated at KRW 305.6 billion and operating profit at KRW 7 billion. Revenue is expected to decline 2% year over year, while operating profit is projected to return to profitability," adding that operating profit is expected to fall short of the KRW 11.3 billion consensus.
She assessed that the continued strength of the exchange rate would raise procurement costs for imported brands and reduce short-term profits, but that gross profit margins could improve if the exchange rate declines in the future.
Jeong said, "Given the high proportion of payments made in euros and U.S. dollars, the burden of procurement costs for imported brands will ease once exchange rates decline and stabilize," adding, "Contrary to market concerns, imported fashion sales are continuing to grow, increasing by more than 30% year over year."
She continued, "We believe it is time to anticipate strong fourth-quarter results during the peak season," and added, "Even in the third quarter, excluding the lifestyle segment, revenue grew 19% year over year and showed a trend of improving profits."

[email protected] Lim Sang-hyeok Reporter