[Click eStock] "Hyundai Home Shopping, a Rational Alternative in the Era of Contact Hardships"

[Asia Economy Reporter Park Ji-hwan] Yuanta Securities evaluated Hyundai Home Shopping on the 28th as a reasonable alternative in the era of contact hardship that began due to the impact of the novel coronavirus infection (COVID-19). Accordingly, they maintained the investment opinion 'Buy' and the target stock price of 105,000 KRW.

Researcher Lee Jin-hyeop of Yuanta Securities stated, "Operating profit for the third quarter this year is expected to be 34.3 billion KRW, a 69.5% increase compared to the previous year." The main reasons for the favorable performance outlook are the turnaround in home shopping performance and the strong performance of L&C. For a stock price rebound, the researcher believes that a combination of 'stable profit growth in the core business + performance growth of subsidiaries' must form an earnings momentum.

The biggest cause of poor performance in the first half was that GPM was damaged due to promotions for growth, but from the third quarter, it is expected that the promotion intensity will be reduced and GPM will improve compared to the previous year. In the case of L&C, operating profit is also expected to increase by 88.3% year-on-year to 7.9 billion KRW, and it is forecasted that profitability will improve as the margin spread shows favorable trends.

Researcher Lee Jin-hyeop said, "Although there is a clear differentiation in the impact of COVID-19 resurgence by distribution type, investment sentiment toward the entire contact sector is rapidly deteriorating," and forecasted, "Earnings momentum is expanding, so it seems to be an alternative within the distribution industry."