[Click eStock] "Hyundai Home Shopping, Clear Improvement in Subsidiary Performance... Positive Stock Outlook"

[Asia Economy Reporter Minji Lee] Hanwha Investment & Securities maintained a buy rating and a target price of 115,000 KRW for Hyundai Home Shopping on the 25th.

Hyundai Home Shopping recorded total transaction volume of 1.3677 trillion KRW in the fourth quarter of last year, an increase of 1.8% compared to the same period last year. Operating profit rose 41.5% year-on-year to 43 billion KRW. The core businesses, T-commerce and mobile channels, grew steadily, driving overall performance, while major subsidiaries such as Hyundai L&C continued to grow, and losses at the Australian subsidiary and Hyundai Rental Care were reduced.

Nam Seong-hyun, a researcher at Hanwha Investment & Securities, said, "Overall, the results met expectations and can be evaluated positively even without considering high growth trends," adding, "Growth outside the core business was also evident."

Growth in the home shopping business segment continued throughout last year. Due to the preference for non-face-to-face contact channels amid COVID-19, transaction volume increased by 0.8% and operating profit rose by 13.9% compared to the same period last year.

Among subsidiaries, Hyundai L&C recorded an operating profit of 8.2 billion KRW, a 56% increase compared to the previous year. Losses at Hyundai Rental Care and the Australian subsidiary decreased from 11.2 billion KRW in the same period last year to 7.2 billion KRW. The increase in account numbers and sales growth at the Australian subsidiary were key factors.

This trend is expected to continue this year as well. In the case of Hyundai L&C, improvement in the upstream industry and synergy creation through collaboration with group affiliates are anticipated. Hyundai Rental Care is expected to see an improvement in operating losses due to the increase in cumulative account numbers and expansion of contract renewal rates, along with a reduction in fixed cost burden due to increased sales at the Australian subsidiary. Operating profit improvement outside the core business in the fourth quarter of this year is analyzed to be about 7.5 billion KRW compared to the same period last year.

Researcher Nam Seong-hyun stated, "There is a high possibility that the Hyundai Department Store Group will transform into a manufacturing-centered group," and added, "The improvement in the core home shopping business and major subsidiaries' performance is progressing rapidly, which is positive for the stock price."