Kiwoom Securities analyzed on the 2nd that Hyundai Department Store is expected to reduce fixed costs through this efficiency in operating city duty-free shops and improve profitability and performance. It subsequently raised the target stock price from the previous 63,000 won to 75,000 won, maintaining an 'buy' investment opinion. The closing price of Hyundai Department Store on the previous trading day was 59,300 won.
Hyundai Department Store announced through a disclosure the previous day that it will transfer the high-efficiency merchandise planning (MD) of the Dongdaemun store to the Trade Center and unify the operation of city duty-free shops at the Trade Center. Operations at the Dongdaemun store will be suspended. This decision was made considering the changing consumption trends of Chinese tourists visiting Korea and the relative sluggishness of the Dongdaemun commercial district.
Park Sang-jun, a Research Institute at Kiwoom Securities, explained that "the Dongdaemun store accounts for about one-third of the transaction volume at Hyundai Department Store's duty-free shops, and last year's operating loss at the city store accounted for 50%" and noted that "through this operational efficiency, the transaction volume of 100 billion to 200 billion won from the Dongdaemun store will be absorbed by the Trade Center, and fixed costs of about 35 billion won will be reduced for the duty-free shop corporation."
Kiwoom Securities analyzed that Hyundai Department Store's reduction in the proportion of its city duty-free shop business will positively impact overall performance by reducing fixed costs and efficiently managing working capital. Research Institute Park said, "The company has a stable revenue structure at the airport compared to its competitors, and it is expected that a profit turnaround in the duty-free shop sector will become visible from the second half of this year."
He added that "the benefits of improving consumer sentiment and easing political uncertainty are still valid in the medium term" and stated that "the profitability rebound in duty-free shops will continue to sustain the flow of overall performance improvement."