"Hyundai Department Store Declares Holding Company Transition... Excessive Adjustment Presents Buying Opportunity"

Shin Young Securities Report

[Asia Economy Reporter Myunghwan Lee] As Hyundai Department Store Group announced its transition to a holding company, securities analysts suggested that excessive stock price adjustments could be seen as buying opportunities.

On the 3rd, Shin Young Securities analyzed, "The direction of Hyundai Department Store Group's shares after this split announcement will depend on its growth strategy and shareholder-friendly policies."

According to the Financial Supervisory Service's electronic disclosure system (DART), Hyundai Department Store Group announced on the 16th of last month that it decided to split its core affiliates, Hyundai Department Store and Hyundai Green Food, through a spin-off into an investment division (holding company) and a business division (operating company). Following this decision, Hyundai Department Store announced on the same day that it would spin off into a newly established company, Hyundai Department Store Holdings (23.24%), and the existing company, Hyundai Department Store (76.76%). Hyundai Department Store Holdings will become the holding company, with Hyundai Department Store and Hanmu Shopping as its subsidiaries.

However, Shin Young Securities evaluated that the news of this split and holding company transition might have been difficult for investors to welcome. This is because the major affiliates, except for Hansome, have not achieved clear performance or stock price results. Hyundai Department Store Group has expanded dividends centered on Hyundai Home Shopping, Hansome, and Green Food, which have abundant cash flow, and Hyundai Department Store has continued its growth by steadily increasing offline stores. Nevertheless, Shin Young Securities pointed out that these movements somewhat fell short of market expectations.

Shin Young Securities advised that since the market has continued to adjust after the announcement of Hyundai Department Store Group's split plan, it is a valid strategy to check whether opportunities can be found during excessive adjustments.

In particular, Shin Young Securities diagnosed that it is worth re-examining the value and future whereabouts of Hyundai Home Shopping, which requires share restructuring during the holding company transition. Among major domestic home shopping companies, listed companies such as CJ, GS, and NS Home Shopping have all merged with affiliates within their groups, losing their status as standalone listed companies. Considering these past cases, Shin Young Securities explained that it is not easy for value to be highlighted when affiliate mergers are scheduled. However, they analyzed that the blueprint for the holding company's value and synergy could vary depending on which affiliate it aligns with.

Shin Young Securities also noted that it is worth paying attention to the strategy of the soon-to-be-launched Hyundai Department Store Holdings. Researcher Jung-yeon Seo of Shin Young Securities stated, "(Hyundai Department Store Holdings) will directly hold Hanmu Shopping and will be the entity to newly present the group's platform strategy, so it should provide investors with the most concrete picture regarding future growth drivers and shareholder-friendly policies."