[Click eStock] "Hyundai Department Store Expected to Meet Q4 Earnings Forecast"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities maintained a 'Buy' rating and a target price of 105,000 KRW for Hyundai Department Store on the 20th, expecting its Q4 earnings to meet market consensus.

Joo Younghoon, a researcher at NH Investment & Securities, said, "Although social distancing adjustment measures were announced, Q4 earnings are expected to sufficiently meet consensus," adding, "It is time to buy based on earnings rather than vague concerns."

NH Investment & Securities estimated Hyundai Department Store's Q4 consolidated sales at 2.6315 trillion KRW and operating profit at 104.1 billion KRW, representing increases of 25.8% and 52.8% year-on-year, respectively. The department store segment is expected to see an 11% same-store sales growth, total sales up 21.1% to 1.9139 trillion KRW, and operating profit rising 34.1% to 109.7 billion KRW. Researcher Joo explained, "With luxury goods and apparel sales recovery combined, the results for October and November exceeded expectations," and added, "Considering the low base in the same period last year, December is also likely to achieve over 20% same-store sales growth."

The duty-free segment's performance is estimated at total sales of 717.6 billion KRW, up 40.2%, with an operating loss of 5.6 billion KRW. Researcher Joo noted, "Average daily sales have been maintained in the mid-8 billion KRW range, and with no special cost issues, a significant improvement in operating loss compared to the previous quarter and the same period last year is expected," further analyzing, "Since the airport duty-free rent reduction has been extended for six months, the visibility of achieving the first-ever monthly break-even point (BEP) in January next year is very high."

Although concerns may arise that strengthened social distancing could negatively impact the business environment, the effect on earnings is expected to be minimal. Researcher Cho said, "The period during which this measure affects the department store's Q4 earnings is only about two weeks, so the impact is small, and since the duty-free business structure is wholesale-centered, there is virtually no correlation," concluding, "Considering this, the possibility of Q4 earnings falling short of market expectations is low, and we maintain a positive view of the retail sector as a promising investment."