[EQUITIES] ‘Shinsegae’s duty-free business might suffer from Chinese sanctions’

[THE INVESTOR] The Chinese government’s restrictions on tourists to South Korea in relation to THAAD deployment could increase uncertainty in Shinsegae’s duty-free business, according to NH Investment and Securities on Oct. 26.

The securities firm lowered the target price to 300,000 won (US$265.58) from 330,000 won. 

“However, even when the number of Chinese tourists decreases by 20 percent Shinsegae’s duty-free store’s daily revenue will only decline 8.5 percent to 1.74 billion won from 1.9 billion won. Rather its online sales ratio is the highest in the local industry at 32 percent, and might enjoy unsolicited gains,” emphasized analyst Lee Ji-yeong.

“The value of Shinsegae’s duty-free store reflected in its stock price is zero, and further decline in stock price is too much,” added the analyst maintaining a “buy” recommendation.

By Hwang You-mee (glamazon@heraldcorp.com)