Hyundai Home Shopping Sees Strong Sales of High-Margin Products... Continued Performance Improvement

Maximizing Profitability with Differentiated MD Capabilities
"Annual Average Operating Profit Growth of 11% Over the Next 3 Years"

[Asia Economy Reporter Minji Lee] Opinions have emerged that Hyundai Home Shopping will continue its performance improvement trend next year. According to KB Securities on the 14th, over the next three years, Hyundai Home Shopping's consolidated sales are expected to grow at an average annual rate of 5%, and operating profit by 11%. In the third quarter, Hyundai Home Shopping recorded consolidated sales of 579.4 billion KRW and operating profit of 38.6 billion KRW, growing 7% and 91% respectively compared to the same period last year. Sales met market expectations, and operating profit exceeded them by 25%.

The home shopping division posted strong results with transaction volume (sales) of 963.9 billion KRW and operating profit of 34.8 billion KRW, increasing by 5% and 30% respectively. Despite the impact of COVID-19 on department stores and convenience stores, home shopping's stable performance drew attention. Shin-ae Park, a KB Securities researcher, said, “Transaction volume grew 5% due to strong sales of high-margin products such as health and functional foods, food, kitchen and household goods, and masks. The gross profit margin improved by 0.3 percentage points due to product mix improvement, and the selling and administrative expense ratio decreased by 0.4 percentage points based on efforts to reduce card fees and optimize advertising and promotional expenses.”

Hyundai L&C's sales grew by 3%, and operating profit increased by 225%. Following the second quarter, the cost ratio improved in the third quarter due to stabilization of raw material prices (PVC, MMA, etc.), combined with various efforts to reduce selling and administrative expenses.

Hyundai Rental Care's sales grew by 32%, but the operating loss slightly increased to 6 billion KRW. Since the second quarter, advertising expenses have increased, and rental asset disposal losses have also expanded. The number of new accounts increased by only 14,000 compared to the previous quarter, showing a slight slowdown in net growth. The Australian subsidiary recorded sales of 4.8 billion KRW, a 50% increase compared to the previous quarter. Operating loss slightly increased to 4.3 billion KRW compared to the previous quarter.

In the fourth quarter, home shopping's standalone transaction volume is expected to reach 1.0932 trillion KRW, and operating profit 41.6 billion KRW, growing 5% and 12.2% respectively compared to the same period last year. Transmission fees, which had long burdened profitability, have stabilized and are expected to increase by around 3% next year. Jong-ryeol Park, a Hyundai Motor Securities researcher, explained, “Next year's operating performance momentum is expected to continue steadily. Although transaction volume growth will not be high as competition with e-commerce companies and in the mobile sector is being avoided, operating profit will maintain a favorable growth trend through profitability-focused management.”

The combined operating profit contribution of subsidiaries is also expected to expand from 3% this year to 15% next year. Researcher Shin-ae Park said, “Due to deteriorating investment sentiment across the distribution sector, the stock price has fallen excessively, and the current stock price is trading at a PER of 5 to 6 times for next year. A low-price buying approach is still valid.”

This content was produced with the assistance of AI translation services.