[Click eStock] Hyundai Department Store, Earnings Momentum Strengthens Again

[Asia Economy Reporter Lee Seon-ae] Hyundai Motor Securities announced on the 24th that it maintains a buy rating and a target price of 110,000 KRW for Hyundai Department Store.

Jong-ryeol Park, a researcher at Hyundai Motor Securities, stated, "Considering the favorable earnings momentum, the stock price has undergone price and time corrections since the mid-May peak, so approaching with a strategy of phased buying at the current price level is deemed effective," adding, "Due to the recent stock price decline, the valuation (12-month forward Price-to-Earnings Ratio (PER) and Price-to-Book Ratio (PBR) are 7.9 times and 0.4 times respectively) has become even more attractive."

On a consolidated basis for Q4, total sales are expected to reach 2.6335 trillion KRW (YoY 25.9%), and operating profit 95 billion KRW (YoY 39.5%), recovering from the previous quarter's sluggish performance, indicating a significant improvement in earnings momentum. The department store segment has shown sales normalization since September, and especially from November, with the transition to With-Corona, the sales growth trend has become stronger. Total sales and operating profit are expected to be 1.8894 trillion KRW and 102 billion KRW respectively, up 19.6% and 20.7% year-over-year, playing a driving role in the improvement of consolidated earnings. The operating profit margin is also expected to improve by 0.1 percentage points year-over-year to 5.4%, supported by the strength in fashion accessories. Although the duty-free store experienced a temporary operational disruption in July, normal business activities have since resumed. The average daily sales are rapidly improving, and the operating loss in Q4 is expected to shrink significantly to 7 billion KRW.

Researcher Park emphasized, "Although some European countries have recently strengthened quarantine measures due to a surge in confirmed cases, it is expected that there will be a gradual transition to With-Corona going forward," and added, "Next year, the full-scale With-Corona will lead to normalization of social gatherings, and the strong performance in the fashion and food & beverage sectors will drive overall department store earnings improvement. The duty-free stores will also see earnings improvement through the normalization of overseas travel."