[Click eStock] Hyundai Home Shopping, Beneficiary of COVID-19 'Stay-at-Home' Trend

[Asia Economy Reporter Ji Yeon-jin] KB Securities stated on the 8th that the differentiated performance stability of home shopping has been highlighted due to the outbreak of COVID-19, maintaining a buy rating and a target price of 100,000 KRW for Hyundai Home Shopping.

Hyundai Home Shopping's consolidated sales this year are expected to increase by 5% year-on-year to 2.4137 trillion KRW, and operating profit is projected to rise 10% to 168.8 billion KRW. Home shopping segment's transaction volume and operating profit are estimated to grow by 4% each. From the third quarter of this year, as social distancing measures gradually ease, operating profit growth in the second half is expected to be limited.

However, Hyundai Rental Care's operating loss is expected to narrow to 7.4 billion KRW compared to last year, and Hyundai L&C's sales and operating profit are estimated to increase by 4% and 2%, respectively.

Hyundai Home Shopping recorded consolidated sales of 615.3 billion KRW in the fourth quarter of last year, up 6% year-on-year, and operating profit increased by 42% to 43 billion KRW. Due to subsidiary impairment losses of 7.6 billion KRW (Rental Care, Australian subsidiary) and equity method losses of 4 billion KRW, pre-tax profit fell 66% short of market expectations, but home shopping performance reached transaction volume of 1.0491 trillion KRW and operating profit of 42.3 billion KRW. This was thanks to increased sales of high-margin products such as health supplements, food, and daily necessities.

Shinae Park, KB Securities analyst, explained, "The profitability of subsidiaries is gradually improving, albeit at a slow pace," adding, "The current stock price corresponds to a price-to-earnings ratio (P/E) of only 6.7 times based on this year's estimates, making low-price buying still valid."