[Click eStock] Hyundai Department Store 'Shoppers Are Coming Back'

[Asia Economy Reporter Junho Hwang] Kiwoom Securities maintained Hyundai Department Store's target stock price at 103,000 KRW on the 5th. Although the fourth-quarter earnings last year fell short of market expectations, from February this year, they anticipated overall performance improvement momentum driven by the recovery of existing department store growth rates and a rebound in fashion/accessory demand.

Hyundai Department Store recorded an operating profit of 68.1 billion KRW in the fourth quarter of last year, a 36% increase compared to the previous year. Although this was below market expectations, excluding the issue of increased right-of-use asset depreciation expenses (6.1 billion KRW) due to the application of lease accounting for airport duty-free stores, it can be considered generally in line with market expectations. Hyundai Department Store's consolidated net income attributable to controlling shareholders was 15.9 billion KRW, which was weak compared to operating profit, due to the impairment loss on right-of-use assets related to airport duty-free stores (approximately 25 billion KRW).

Kiwoom Securities noted that considering the existing department store growth rates were approximately -15% and -30% to -35% (management standards) in February and March last year, respectively, from February this year, some recovery in existing department store growth rates due to the base effect is expected. They also believed that the demand recovery effect is unlikely to be short-lived.

In particular, the domestic fashion and accessory retail market size last year is estimated to have decreased by about 15 trillion KRW (-17%). This year, it is expected to show strong growth as the base effect combines with deferred demand in fashion/accessories.