Hyundai Department Store's Performance and Stock Price That Leave No Choice but to Live More

'The Hyundai Seoul' Sounds Forest_View

[Asia Economy Reporter Lee Seon-ae] Kakao Pay Securities has maintained a 'Buy' rating on Hyundai Department Store and upgraded its target price, recommending it as the top pick within the sector.

According to Kakao Pay Securities on the 8th, Hyundai Department Store's Q1 consolidated total sales reached 2.0338 trillion KRW (YoY +47%), and operating profit was 65 billion KRW (YoY +336.3%), exceeding consensus by about 9%. The performance momentum is expected to become more distinct in the second half. Firstly, department stores are experiencing sales growth as strong consumer sentiment recovery begins. Duty-free shops also saw average daily sales of about 6.5 billion KRW in April, with smoother product sourcing leading to a gradual increase in downtown store sales and a reduction in losses.

Researcher Heo Jena of Kakao Pay Securities explained, "We are raising the target price from 94,000 KRW to 120,000 KRW," adding, "This is based on applying a price-earnings ratio (PER) of 15 times to the expected net profit over 12 months."

Kakao Pay Securities assumed a 6% same-store sales growth rate for Hyundai Department Store this year, 750 billion KRW in sales for The Hyundai Seoul, and quarterly average daily duty-free sales of 6/6.4/7 billion KRW. Regarding this, Researcher Heo said, "This should be considered a conservative estimate," noting, "The improvement in department store profitability is likely to accelerate, and sales growth compared to 2019, before the COVID-19 outbreak, is clear." He added, "With expanded buying power in the duty-free sector, the deficit is rapidly shrinking, and there is also high potential for profitability improvement," emphasizing, "Despite an expected 131% increase in operating profit this year due to same-store recovery, high growth of new stores, and volume growth in duty-free sales driven by global cosmetics demand, the current stock price level is only about 11 times PER."

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