Hana Securities downgraded target prices for Korean hotel stocks GS P&L and Seobu T&D despite strong earnings forecasts, citing excessive divergence between current stock prices and fundamentals. GS P&L's target was lowered from 72,000 won to 64,000 won, while Seobu T&D's target dropped from 21,000 won to 18,000 won. Analyst Lee Ki-hoon attributed the downgrades to the widening gap with actual stock prices but strongly recommended overweight positions, describing the stocks as 'absurdly undervalued.' The assessment comes as May cumulative foreign tourist arrivals in Korea increased 20% year-over-year to 8.72 million and both companies are forecast to deliver robust Q2 results. Korean hotel stocks have underperformed despite the tourism recovery and record highs for global hotel chains like Hilton and Marriott, with GS P&L and Seobu T&D trading at 2026 estimated PER of only 12x or EV/EBIT multiples of 6-8x.
Hana Securities Downgrades Hotel Stock Targets Amid Price Divergence
Hana Securities lowered target prices for GS P&L from 72,000 won to 64,000 won and for Seobu T&D from 21,000 won to 18,000 won to reflect the divergence with current stock prices. Lee Ki-hoon stated the downgrades were unavoidable due to the excessive gap but maintained strong overweight recommendations, calling the valuation levels 'absurd.' The analyst noted that May cumulative foreign tourist arrivals in Korea reached 8.72 million, a 20% increase year-over-year. May cumulative Chinese inbound tourists to Korea and Japan were 2.56 million (+24%) and 1.72 million (-56%) respectively, confirming Korea's benefit from the 'Korea-Japan rivalry.' Concerns about flight cancellations due to surging oil prices were resolved as oil prices normalized. Lee highlighted that global hotel chains Hilton and Marriott continue to hit record highs, while Korean hotel stocks remain depressed. GS P&L and Seobu T&D are trading at 2026 estimated PER of only 12x or EV/EBIT multiples of 6-8x.
GS P&L Q2 Forecast Shows 107% Operating Profit Growth
GS P&L's Q2 forecast revenue and operating profit are 151.4 billion won and 24 billion won respectively, representing 35% and 107% increases year-over-year. The operating profit forecast aligns with the consensus estimate of 23.5 billion won. Average Daily Rate (ADR) is anticipated to rise approximately 10% across most hotels, considering the average won-dollar exchange rate in Q2 last year was around 1,400 won. The Occupancy Rate (OCC) at Grand Hotel declined slightly due to banquet hall renovations that continued from January to April, impacting revenue. However, Westin's OCC is estimated to have rapidly increased to around 85%, representing a rise of over 10 percentage points compared to Q1.
Seobu T&D Q2 Occupancy Rate Expected to Reach Record High
Seobu T&D's Q2 forecast revenue and operating profit are 75.8 billion won and 19.8 billion won respectively, representing 39% and 77% increases year-over-year. The operating profit forecast is in line with the consensus estimate of 21.2 billion won. The hotel division's OCC is anticipated to reach approximately 78%, surpassing the previous record of 75% set in Q4 last year. ADR is forecast to exceed 200,000 won for the first time, reaching 210,000 won with a 12% increase.
FAQ
Why did Hana Securities downgrade target prices for GS P&L and Seobu T&D?
Hana Securities lowered target prices for GS P&L from 72,000 won to 64,000 won and for Seobu T&D from 21,000 won to 18,000 won due to the excessive divergence between current stock prices and the firm's previous targets. Analyst Lee Ki-hoon stated the downgrades were unavoidable given the gap but maintained strong overweight recommendations, describing the stocks as 'absurdly undervalued' at 2026 estimated PER of only 12x or EV/EBIT multiples of 6-8x.
What are the Q2 earnings forecasts for GS P&L?
GS P&L's Q2 forecast revenue is 151.4 billion won, a 35% increase year-over-year, with operating profit forecast at 24 billion won, a 107% increase year-over-year. The operating profit forecast aligns with the consensus estimate of 23.5 billion won. Average Daily Rate is expected to rise approximately 10% across most hotels, while Westin's Occupancy Rate is estimated to have reached around 85%, over 10 percentage points higher than Q1.
How did foreign tourist arrivals to Korea perform in May?
May cumulative foreign tourist arrivals in Korea reached 8.72 million, representing a 20% increase year-over-year. May cumulative Chinese inbound tourists to Korea totaled 2.56 million, a 24% increase, compared to 1.72 million for Japan, a 56% decrease, confirming Korea's benefit from the 'Korea-Japan rivalry' in attracting Chinese tourists.
