Shinhan Investment Corp. noted on the 26th that there is a significant possibility of a recovery in the stock price of Hotel Shilla as performance improvements become visible. They upgraded their investment rating from 'trading buy' to 'buy.' The target price was also raised by 46.3% from the previous 41,000 won to 60,000 won. The previous closing price of Hotel Shilla was 52,200 won.

Courtesy of Hotel Shilla.

Jo Sang-hoon, a researcher at Shinhan Investment Corp., said, “Concerns about the fundamental drop in the appeal of the duty-free channel, changes in cosmetics consumption trends, and the prolonged slump in Chinese consumption persist, but as the intensity of competition eases, we are entering a phase where performance improvements are becoming evident.”

He explained, “Discussions are underway regarding the implementation of a visa-free policy for Chinese group tourists starting in the third quarter of this year (July to September), which also raises the possibility of a stock price recovery.”

Shinhan Investment Corp. estimated that Hotel Shilla would record sales of 1.07 trillion won and an operating profit of 16.3 billion won in the second quarter of this year (April to June). The sales figure represents a 6.5% increase compared to the same period last year, while the operating profit is a 41.1% decrease, aligning with market expectations.

The duty-free (TR) sector benefited from the suspension of corporate transactions by competitors last quarter and is believed to have contributed to performance sustainability through rent reduction effects at overseas airport locations.

The hotel and leisure institutional sector is estimated to see a 7% increase in operating profit compared to the same period last year, despite poor performance at the Jeju location, thanks to strong results at the Seoul location and Stay. Researcher Jo noted, “It is encouraging that the average daily rate of major hotels in downtown Seoul has been rising rapidly due to a shortage of hotel supply in recent years.”