Kiwoom Securities said on the 6th that as the domestic consumer economy revives, department store sales at Hyundai Department Store are growing beyond expectations. It raised its target price to 110,000 won from 100,000 won and maintained a buy rating. The previous trading day's closing price of Hyundai Department Store was 83,000 won.
This year, on a consolidation basis, Hyundai Department Store's third-quarter operating profit rose 12% from a year earlier to 72.6 billion won. Kiwoom Securities assessed that, excluding ZINUS, which posted an operating loss of 7.8 billion won, the core business results beat market expectations. Hyundai Department Store holds 38% equity in ZINUS.
Park Sang-jun, an analyst at Kiwoom Securities, said, "It is regrettable that ZINUS's sluggish performance is lasting longer than expected, but thanks to the strong domestic consumer economy, sales and earnings estimates for the core department store business are expected to be revised upward."
In particular, sales growth in high-margin fashion categories stands out, and the operating leverage effect from higher sales is expected to be significant.
The sharp expansion in the share of sales to foreigners is also positive. Park said, "This year, department store sales to foreigners are expected to grow by about 20%, expanding the foreign sales share to around 6%."
Park said, "As the awareness of Korean Wave content rises in the global market, interest among foreigners in traveling to Korea is strengthening, so sales to foreigners will become a structural driver of department store sales growth."
He added, "Supported by a robust domestic consumer economy, an increase in inbound foreigners, and efficiency gains in the duty-free business, performance centered on the core business is expected to continue improving."