Kiwoom Securities Upgrades South Korea Department Stores to Overweight as Foreign Tourists Rise 19.4%

According to Kiwoom Securities, on July 18 the firm upgraded South Korea's department store sector to 'overweight' citing recovering domestic consumption and expanding foreign visitor spending. The three major retailers—Lotte Shopping, Shinsegae, and Hyundai Department Store—are trading at an average 12-month forward price-to-earnings ratio of 12.2x, up from 7.5x last year. Shinsegae trades at 14.5x.

Foreign tourist arrivals to South Korea reached 1.946 million in May, up 19.4% year-over-year, with Chinese visitors increasing 25% to 2.562 million. Department store and shopping mall expenditures by foreign tourists surged 42% in the first quarter and 67.5% in April-May, outpacing overall tourism spending growth. Kiwoom named Shinsegae as its top pick, citing its premium brand positioning and flagship store renovations expected to capture the strongest benefits from foreign and domestic consumption recovery.