Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - UBS downgraded Shinsegae Inc (KS:004170) from Neutral to Sell on Monday, while lowering its price target to KRW130,000.00 from KRW150,000.00.
The South Korean retail company’s stock has risen 31% year-to-date, driven by expectations of consumption recovery in the second half of 2025, potential rate cuts, reduced political uncertainty, and government consumption coupon programs.
UBS believes these positive expectations are overly optimistic compared to Shinsegae’s fundamentals, projecting that the company will continue losing market share to e-commerce competitors with limited potential for further store expansion.
The investment bank’s 2025/26 operating profit estimates for Shinsegae are 10%/11% below consensus, as UBS analysts expect consumption recovery from government coupons will primarily benefit staples rather than discretionary spending, noting that the coupons cannot be used in department stores.
Despite temporary visa-free entry for Chinese group tourists, UBS sees limited upside potential for Shinsegae’s duty-free business due to shifting Chinese spending patterns and weaker duty-free pricing compared to Chinese e-commerce platforms.
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