[Click eStock] "Hyundai Department Store, Performance Momentum Continues Despite Negative Environment"

[Asia Economy Reporter Lee Jung-yoon] Heungkuk Securities maintained a buy rating and a target price of 100,000 KRW on Hyundai Department Store on the 4th, stating that although the overall consumption environment this year is negative, the strength of the luxury goods market will be maintained.

Hyundai Department Store's consolidated total sales for the fourth quarter of last year increased by 16.3% year-on-year to 2.9819 trillion KRW, and operating profit rose by 34.5% to 126.7 billion KRW. This is attributed to the continued strong performance of the department store despite the duty-free store slump and the improved performance of Jinus.

Park Jong-ryeol, a researcher at Heungkuk Securities, said, "The favorable performance of the department store was mainly driven by the strength of the luxury goods market centered on the wealthy and high-income groups," adding, "The operating profit of the department store division is expected to be 121.7 billion KRW, leading the overall performance."

Additionally, the duty-free store division posted an operating loss of 12 billion KRW, continuing its sluggish trend, but the deficit is expected to shrink.

Due to high interest rates and high inflation weakening consumer sentiment, the overall consumption environment this year is negative. However, for the wealthy and high-income groups, consumption polarization is expected to deepen due to improved cash flow. With steady growth centered on department stores, annual consolidated sales this year are projected to increase by 11% year-on-year to 11.5 trillion KRW, and operating profit is expected to rise by 39.7% to 529.3 billion KRW, maintaining a solid performance trend. This is because the department store leads the growth, the deficit of the duty-free store is expected to narrow, and the performance improvement trend of Jinus is expected to continue.

Researcher Park also stated, "Through spin-offs and conversion to a holding company, a form of change quite different from the past is expected to take place," explaining, "Management activities focused on shareholder value will be carried out, and an active shareholder return policy through dividend expansion is expected to continue."

He added, "Contrary to market concerns, the department store's strong performance continues, and the performance momentum is further strengthened by the consolidated inclusion of Jinus," and said, "The duty-free store's performance turnaround in 2023 is certain, and the extent of profitability only varies depending on the situation in China."