Hotel Shilla (008770.KS): OP Beat in 2Q, Driven by Airport DFS Biz / Hotel Biz

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Hotel Shilla (008770.KS): OP Beat in 2Q, Driven by Airport DFS Biz / Hotel Biz

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31 Jul 2026 05:47:49 ET │ 14 pages

Hotel Shilla (008770.KS)

OP Beat in 2Q, Driven by Airport DFS Biz / Hotel Biz

CITI'S TAKE

Hotel Shilla (Shilla) recorded above consensus OP in 2Q, driven by notable

improvement in Incheon Airport DFS biz / hotel biz. Moreover, Shilla

provided relatively constructive narrative on 3Q outlook. After lowering Neutral

FY26-28 NP estimates by 15-29%, we lower our 12-m TP to W49,000. Short-Term View: Upside

Price (31 Jul 26 15:45) W43,550

2Q beat — Shilla recorded W972bn revenue (-5% y/y) and W61bn OP (+606% y/y) in

2Q26, OP coming in at 16% above consensus. We attribute above consensus OP to: Target price W49,000↓

1) notable improvement in Incheon Airport DFS biz on a sequential basis (W20bn from W67,000

tailwind to OP on QoQ basis) after Shilla pulling out from previous loss-making DF1 Expected share price return 12.5%DFS site at Incheon Airport; 2) downtown DFS biz OPM staying at mid-to-high single

digit in 2Q26 (despite slight deterioration in payback ratio amid weak KRW); and 3) Expected dividend yield 0.5%

earnings improvement at hotel biz, driven by double-digit ADR increase. That said, Expected total return 13.0%

NP came in at 34% below consensus, mainly due to equity method loss from HDC-

Market Cap W1,709,256MShilla JV.

US$1,200M

Relatively constructive narrative on 3Q outlook — Shilla provided relatively

constructive narrative on 3Q outlook, including: 1) likely incrementally better DFS

spending by Korean outbound travelers as we start to see stabilizing forex; 2)

scheduled increase in number of flights between China & Korea providing tailwind Price Performance