SK Securities on the 26th said it is time for Hyundai G.F Holdings' rising value in its department store business—buoyed by more foreign tourists thanks to the stronger exchange rate—to feed through to a higher share price. It kept its investment opinion at "Buy" and raised its target price to 20,000 won from 18,000 won. The previous session's closing price was 14,840 won.
SK Securities said shares of Hyundai Department Store, a subsidiary of Hyundai G.F Holdings, have risen 146.8% since the end of March, outpacing the KOSPI's 76.8% gain over the same period. Hyundai G.F Holdings, the largest shareholder of Hyundai Department Store, has steadily increased its equity in Hyundai Department Store, with its stake rising to 37.2% from 32.2% last year.
The share of Hyundai Department Store in Hyundai G.F Holdings' net asset value (NAV) also climbed from 38.7% to 58.4%. Thanks to the increased equity in Hyundai Department Store and the share price rally, Hyundai G.F Holdings' NAV rose 56.0%, from 1.6 trillion won to 2.5 trillion won, but its share price gained only 7.9%.
Choi Gwan-sun, an analyst at SK Securities, said a premium from shareholder returns can also be expected for Hyundai G.F Holdings.
Hyundai G.F Holdings plans to buy back 100 billion won of its own shares this year. From February to April this year, it purchased 3.42 million shares (50 billion won). After August this year, it plans an additional buyback of 50 billion won. Once the second-half buyback is completed, a cancellation is expected.
Choi said, "Hyundai G.F Holdings is carrying out a comprehensive share swap to make Hyundai Home Shopping a wholly owned subsidiary," adding, "Considering Hyundai Home Shopping's DPS and the swap ratio, it plans this year's dividend at 441 won per share (a dividend yield of 3.0%)."
Choi said, "This year's total shareholder return, including share buybacks and dividends, comes to 7.4%," but noted, "the favorable shareholder-return policy is not being reflected in the share price."
The comprehensive share swap with Hyundai Home Shopping now underway is in its final stages. After that, Hyundai Home Shopping will undergo a spin-off, followed by a merger of the investment company created by the spin-off with Hyundai G.F Holdings.
Choi also said positive effects can be expected, including expanded liquidity through an increase in Hyundai G.F Holdings' free float, higher dividend income through the addition of Hyundai Futurenet and Handsome as subsidiaries, and the removal of behavioral restrictions at Hyundai Bioland.