Kyobo Securities on the 1st said Hyundai Department Store is a representative stock set to benefit from rising sales to foreigners. It maintained its "Buy" rating and raised the target price to 103,000 won from 91,000 won. The previous day's closing price for Kyobo Securities was 88,500 won.
Jang Min-ji, an analyst at Kyobo Securities, said, "We judge it to be a representative stock that can fully reflect expectations for an increase in sales to foreigners," naming Hyundai Department Store as the top pick in the sector.
According to Jang, at The Hyundai Seoul, fashion accounts for 46% and luxury for 32% of sales to foreigners. The fact that lower-ticket fashion exceeds luxury in the sales mix shows a differentiated competitive edge in terms of attracting foreign customers.
She also viewed the duty-free division as having a structure that can benefit most efficiently from an expansion in inbound travel (foreigners visiting Korea), given its lighter rent burden. Despite ZINUS's short-term sluggishness, Jang judged that the growth story driven by inbound growth and competitive strength at core stores remains intact.
Meanwhile, Kyobo Securities estimated that Hyundai Department Store will post consolidated revenue of 1.0055 trillion won and operating profit of 70.6 billion won in the third quarter (July–September). Revenue likely fell 3% from a year earlier, but operating profit likely rose 9.3%.
Jang analyzed, "Department stores are estimated to have shown solid growth of more than 5% based on gross merchandise value in July–August," adding, "Watches and accessories continue to log strong growth of more than 20%, and it is positive that the fashion sector shifted from contraction to positive growth thanks to improved consumer sentiment and this month's lower temperatures."
She continued, "Duty-free sales will inevitably decline due to the closure of the Dongdaemun branch at the end of July, but the withdrawal from loss-making stores is expected to swing the division to profit," adding, "ZINUS is also likely to see orders normalize from the fourth quarter, when price hikes are completed."
However, amid ongoing negotiations over price hikes due to Indonesia's tariff increase (10%→19%), profitability is expected to have deteriorated because of higher promotional expenses.