[Click e-Stock] "Hyundai Department Store Target Price Raised on Improved Consumer Sentiment"

On May 12, Shinhan Investment Corp. raised its target price for Hyundai Department Store from 71,000 won to 75,000 won. The company cited expectations for improved purchasing power, driven by monetary and fiscal policies that are expected to accelerate after the presidential election, as the reason for the adjustment.

In the first quarter of this year, Hyundai Department Store recorded sales of 1.1 trillion won and operating profit of 112.5 billion won. These figures represent increases of 15.4% and 63.4%, respectively, compared to the same period last year. Although the department store segment showed slight weakness due to sluggish domestic consumption and a deterioration in category mix, strong performances from Zinus and the duty-free business offset these effects.

Specifically, the department store segment saw weak sales in the high-margin fashion category due to unfavorable weather conditions, and also faced increases in depreciation and rental expenses. The duty-free business reduced its operating loss by achieving daily sales of 6 billion won, thanks to eased competition in downtown locations and the effects of product assortment restructuring at airport stores. Zinus returned to profitability as sales recovered, driven by expanded supply to client companies.

Shinhan Investment Corp. analyst Cho Sanghoon set the target price at 75,000 won. He explained, "Attractive valuation and an enhanced shareholder return policy will serve as strong downside support factors," adding, "We view additional shareholder return policies positively, such as using half of the cash inflow (40 billion won) from the sale of the remaining stake in Hyundai Home Shopping to repurchase treasury shares (1.5%)."