[Click eStock] "Hyundai Department Store, Short-term Stock Price Decline Inevitable... Target Price Down"

Target Price Revised Downward by 7% Compared to Previous Level

Shinhan Investment Corp. on the 10th lowered the target price for Hyundai Department Store from 75,000 KRW to 70,000 KRW, viewing short-term stock price weakness as inevitable. The investment rating was maintained at 'Buy.'

Researcher Jo Sang-hoon of Shinhan Investment Corp. explained, "In the second quarter of this year, the poor performance of Zinus is expected to continue, making short-term stock price weakness unavoidable," adding, "We lowered the target price by 7% following a downward revision of Zinus's earnings estimates."

Hyundai Department Store recorded sales of 951.7 billion KRW in the first quarter, down 13.3% year-on-year, and operating profit of 68.9 billion KRW, down 11.5%. Researcher Jo said, "The first-quarter results of Hyundai Department Store fell short of consensus (average securities firm forecast) by 19%," analyzing, "While the department store's profit increase was positive and the duty-free store performed well, Zinus's poor performance was a drag."

The department store showed resilience with a 7% same-store sales growth despite a high base, and operating profit increased by 8%. The duty-free store's total sales rose 27.7% year-on-year, and the deficit improved due to an increased proportion of foreign individual travelers (FIT). On the other hand, Zinus's sales decreased by 33.5% as clients focused on clearing existing product inventory following new product launches, resulting in a turnaround to an operating loss.

Researcher Jo forecasted, "It will take time until the turnaround strategy for Zinus is confirmed in the third quarter," and added, "Improvements in the department store and duty-free store performance will act as downside support factors."