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Shinsegae Corp. was among the big gainers on Monday after it secured a license Saturday to operate a downtown duty free shop, with analysts anticipating that it will have further opportunities to expand.
The department store-to-discount store chain operator jumped 3.5 percent to 264,500 won, outperforming the broader Korea Composite Stock Price Index's 1.5 percent loss on Monday.
On Saturday, Shinsegae Group and Doosan Group earned licenses to run duty free stores in Seoul after a battle which began in September. Lotte Group, which has operated the most lucrative Lotte Duty Free Shop in central Seoul, managed to retain its license which is valid for another five years, according to the Korea Customs Service (KCS).
But Doosan Corp. fell 5.3 percent to 117,000 won because it does not have any experience in running a duty-free shop amid tough competition with the existing giant Lotte Duty Free Shop and the new bigger rival Shinsegae duty free shop.
"As Shinsegae's duty free shop is located near the downtown shopping street in Myeongdong and the Namdaemun market, it will gain a strong earnings momentum in the long term helped by Chinese tourists," Kiwoom Securities analyst Nam Seong-hyun said.
Doosan Group's duty free store will be placed in Doosan Tower in the Dongdaemun market, another tourism site for foreigners. But the machinery-to-construction conglomerate, as new comer, may face bigger challenges in the duty free shop business due to competition which will cut into margins, he said.
Lotte Duty Free kept its license to run a duty free shop in central Seoul but lost on it had to operate an outlet at Lotte World Tower in Jamsil, eastern Seoul. Lotte's three other outlets in the COEX mall in southern Seoul, Jeju and Busan have a number of years before there will be a public bid for renewal, KCS said.
Hotel Shilla also maintained its license to run duty free shops in Seoul and on Jeju. Hotel Shilla plunged 13 percent to 89,300 won as competition will weigh on its margins. Hotel Lotte, the operator of Lotte Duty Free, is not listed yet.
SK Networks, an affiliate of SK Group, failed to extend its license to operate its duty free shop in Walkerhill Duty Free in eastern Seoul. It is supposed to shut down altogether in May next year after 20 years of operation there, KCS said.
Lotte's duty free store posted 2.29 trillion won in sales in the January-June period, accounting for 50 percent of the country's duty free industry. The Shilla Duty Free, an affiliate of Samsung Group, ranked second with a share of 30 percent, or 1.35 trillion won in sales, KCS data showed.
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