[Click eStock] "Hyundai Home Shopping, Focus on Subsidiary's Earnings Growth Potential"

[Asia Economy Reporter Song Hwajeong] On the 14th, Hanwha Investment & Securities raised the target price for Hyundai Home Shopping from 115,000 KRW to 123,000 KRW, citing increased growth potential in the earnings of its major subsidiaries. The investment rating was maintained at 'Buy.'

Nam Seonghyun, a researcher at Hanwha Investment & Securities, stated, "Hyundai Home Shopping has been trading in an undervalued range until now," adding, "Despite having substantial cash assets, it had not shown clear results in business growth utilizing these assets. However, with recent earnings growth through new business investments, there is no reason for it to remain undervalued."

He emphasized the need to focus on the earnings growth potential of major subsidiaries. In particular, Hyundai L&C has shown remarkable earnings growth. In the first quarter of this year, Hyundai L&C recorded sales of 276.6 billion KRW, a 9.3% increase compared to the same period last year, and operating profit of 7 billion KRW, up 213.8%. The increase in overseas sales driven by the strong North American housing market supported these results. This trend is expected to continue for some time, leading to positive earnings growth. Researcher Nam explained, "Hyundai L&C's growth will continue in 2022 as well," adding, "Considering the domestic supply volume cycle, the proportion of interior material supply is likely to increase in the second half of 2022, and the effect of additional line expansion at the Sejong plant is expected. There is also a high possibility of expanding the sales network through synergy with the group company (Hyundai Livart)."

Rentalcare and the Australian subsidiary's earnings are also expected to improve. Researcher Nam said, "In the case of Rentalcare, sales growth is expected due to the increase in cumulative subscribers, and the Australian subsidiary will ease fixed cost burdens through scale expansion," but added, "However, the pace of profitability improvement will be somewhat slow."