Hyundai Department Store Group Announces Value-Up Plan... "Semiannual Dividends and Treasury Stock Cancellation to be Pursued"

ROE·PBR Target Presented
"Will Build Trust with the Market"

Hyundai Department Store Group announced on the 8th that its holding company Hyundai GFS Holdings and four listed subsidiaries?Hyundai Department Store, Hyundai Green Food, and Handsome?each held board meetings to establish corporate value enhancement (value-up) plans to be pursued over the next three years.

A Hyundai Department Store Group official explained, "To respond to the government's value-up policy aimed at enhancing undervalued corporate value by expanding shareholder returns, four major affiliates within the group have established corporate value enhancement plans. This reflects the group's strong commitment to becoming a company that grows together with shareholders through proactive shareholder return policies such as semi-annual dividends and treasury stock cancellations."

According to the value-up plans disclosed by each company, the holding company Hyundai GFS Holdings plans to increase its control over high-quality subsidiaries to expand dividend income. It has set a mid-to-long-term goal of achieving an investment return rate of over 4%, exceeding market interest rates. Based on this, starting next year, it will implement semi-annual dividends of over 10 billion KRW in addition to the existing year-end dividends, and gradually increase the total annual dividend payout to 50 billion KRW by 2027. Hyundai GFS Holdings had previously established a mid-to-long-term dividend policy in February to pay a minimum dividend of 150 KRW per share.

In particular, through dividend expansion, it aims to raise the shareholder return ratio (based on separate net income) to over 80%. The shareholder return ratio is the amount a company spends on dividends and treasury stock purchases divided by net income; a higher ratio means the company distributes more profits to shareholders. To expand shareholder returns, Hyundai GFS Holdings canceled 4.0% of its treasury stock worth 23.9 billion KRW at the end of last year.

Hyundai Department Store plans to improve profitability through business expansion centered on new store openings such as The Hyundai Gwangju and Busan Premium Outlets, and by enhancing the business competitiveness of its subsidiaries, including duty-free shops and Zinus. Hyundai Department Store intends to invest 1.2 trillion KRW in The Hyundai Gwangju and 700 billion KRW in the Busan Premium Outlet. Through this, it aims to raise its return on equity (ROE), an indicator of profitability relative to capital, to about 6%, surpassing the department store industry average within the next three years.

It also targets increasing its price-to-book ratio (PBR), which indicates stock price relative to assets, to 0.4 times within three years and 0.8 times in the mid-to-long term. Based on this, Hyundai Department Store plans to implement semi-annual dividends of over 10 billion KRW starting next year in addition to existing year-end dividends, and gradually increase the total annual dividend payout to 50 billion KRW by 2027, similar to Hyundai GFS Holdings. Earlier in February, Hyundai Department Store raised its minimum dividend amount for the next three years through 2026 from 1,000 KRW to 1,300 KRW per share. In particular, it plans to strengthen shareholder returns by canceling half (3.3%) of its treasury stock holdings (6.6%) within this year.

Hyundai Green Food, the group's comprehensive food company, plans to strengthen profitability in its core group meal service business and expand investments in future growth businesses such as care food to achieve both growth and profitability. It aims to maintain a return on equity (ROE) of 11% in the mid-to-long term and targets a price-to-book ratio (PBR) of 0.8 times within three years and over 1.0 times in the mid-to-long term.

Regarding dividend policy, Hyundai Green Food plans to implement semi-annual dividends of over 10 billion KRW starting next year in addition to existing year-end dividends, nearly doubling the total annual dividend payout to about 20 billion KRW. Earlier in February, Hyundai Green Food decided to pay a minimum dividend of 325 KRW per share for the next three years. Additionally, it announced plans to purchase and cancel about 2% of its treasury stock annually, totaling 10.6%, evenly by 2028. A Hyundai Department Store Group official explained, "If Hyundai Green Food proceeds with cash dividend expansion and treasury stock purchase and cancellation as planned, the shareholder return ratio could increase to around 40%."

Handsome, Hyundai Department Store Group's fashion specialist, plans to focus on strengthening profitability by pursuing three mid-to-long-term growth strategies: enhancing global competitiveness of brands such as Time and System, expanding its import portfolio, and extending into lifestyle areas such as beauty. It aims to achieve a return on equity (ROE) of over 6% within the next three years and over 9% in the mid-to-long term. For price-to-book ratio (PBR), it targets 0.5 times within three years and 0.7 times in the mid-to-long term. It also announced shareholder return measures including dividend expansion and treasury stock cancellation. Starting this year, it will increase the cash dividend payout ratio from 10% to over 15% of separate operating profit. It plans to maintain a minimum dividend of 750 KRW for the next three years. In addition to canceling 5.0% of its treasury stock (worth 12.4 billion KRW) earlier this year, it plans to cancel half (4.1%) of its current treasury stock holdings (8.2%) early next year. A Hyundai Department Store Group official said, "If Handsome proceeds with dividend expansion and treasury stock cancellation as planned, the shareholder return ratio, currently about 20%, is expected to rise to the mid-30% range cumulatively over four years (2024?2027)."

Along with announcing the value-up plans, Hyundai Department Store Group also plans to actively strengthen communication with the market. It will regularize the integrated IR event ‘Corporate Day,’ which involves listed affiliates within the group, and expand information provision through enhanced English disclosures and an English IR website for overseas investors. The group also plans to regularly disclose the implementation status of the announced value-up plans to increase transparency. Previously, Hyundai Department Store Group established and operates the ‘Group Value Enhancement Committee,’ composed of financial officers from 13 listed companies, to enhance corporate value.

A Hyundai Department Store Group official stated, "With the establishment of a single holding company system, management efficiency has improved and synergy among group affiliates has been maximized, accelerating the achievement of the group's future growth roadmap, ‘Vision 2030.’ Based on the group's sustainable growth, we will enhance corporate value and build stronger trust with various stakeholders in the market, including shareholders."

Meanwhile, ten listed affiliates within Hyundai Department Store Group?including Hyundai GFS Holdings, Hyundai Department Store, Hyundai Home Shopping, Hyundai Green Food, Handsome, Hyundai Livart, Zinus, Hyundai Everdigm, Hyundai Easywell, and Daewon Kangup?changed their dividend policy in March to eliminate blind dividends. They switched from the previous ‘ex-dividend date first, dividend amount confirmed later’ method to the ‘dividend amount first, ex-dividend date confirmed later’ method. As a result, investors can now confirm dividend amounts before deciding whether to invest, improving dividend predictability.