Top Picks: Hotel Shilla, HDS, FILA Holdings, Shinsegae International, Zinus
The author is an analyst of NH Investment & Securities. She can be reached at jy.lee@nhqv.com. -- Ed.
In 2H21, we recommend paying attention to stocks that: 1) have yet to rise in price; or 2) boast attractive valuations, as the majority of retail/fashion sector plays have already seen share price recovery to above pre-Covid-19 levels.
For the retail industry, we maintain a Neutral stance, taking into account concerns towards reduced domestic consumption following a resumption in overseas travel, the dissipation of y-y low-base effect, and intensifying online competition.
On the other hand, we maintain a Positive view of the fashion sector, believing that earnings momentum will continue on the back of low-base effect and deferred demand for fashion products that saw the largest sales decline in 2H20.
In the retail industry, alongside ripening expectations for a resumption of overseas travel, DFS plays, which have yet to see share price recovery to pre-Covid-19 levels, should receive greater attention. It is also expected that the sports and outdoor fashion industry will continue to perform strongly, backed by global lifestyle changes realized amid Covid-19. In the case of e-commerce, while sales growth is expected to pick up once again in 2H21, competition between large platforms will likely intensify as well. Accordingly, we recommend focusing on brands that are sold via such platforms, rather than the platforms themselves.
Against this backdrop, we recommend Hotel Shilla, Hyundai Department Store (HDS), FILA Holdings, Shinsegae International, and Zinus as our top picks.