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Investing.com - Nomura/Instinet upgraded Hotel Shilla Co Ltd. (KS:008770) stock rating to Buy from Neutral and raised its price target to KRW72,000 from KRW49,000 following the company’s decision to exit its unprofitable airport duty-free business.
Hotel Shilla announced on September 18 that it will withdraw from the Incheon Airport DF1 section duty-free store license after determining that continued losses would exceed the termination penalty costs.
The company will pay a KRW190 billion penalty to Incheon International Airport Corporation and continue operating the duty-free store for six months under the current contract terms.
Nomura noted that while the Incheon Airport duty-free business had been unprofitable long-term, the exit came earlier than expected, demonstrating management’s increased focus on profitability.
The investment firm expects Hotel Shilla to experience margin expansion despite near-term one-off costs related to the exit.
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