[Click eStock] Lotte Hi-Mart, Expanding Online Shopping Sales Share... Partial Buying 'Effective'

Hyundai Motor Securities Report

[Asia Economy Reporter Minji Lee] Hyundai Motor Securities maintained a buy rating and a target price of 44,000 KRW for Lotte Hi-Mart on the 23rd. Although a slowdown in third-quarter earnings is inevitable due to last year's high performance base, it is expected that earnings will improve with the expansion of online shopping sales proportion.

The estimated third-quarter standalone sales are 1.0643 trillion KRW, and operating profit is expected to reach 60.3 billion KRW, increasing by 1.6% and 7.9% respectively compared to the same period last year. Jongryeol Park, a researcher at Hyundai Motor Securities, explained, "Considering last year's high base effect, the company is expected to record solid earnings and recover from the previous quarter's sluggish performance," adding, "Last year, sales and operating profit significantly increased due to favorable factors such as strong air conditioner sales and premium large home appliances with top efficiency (10% rebate)."

In the second half of this year, the burden on earnings due to the reflection of last year's COVID-19 benefits is expected to increase. This is because increased time spent at home last year highlighted home-related consumption, leading to sustained demand for premium large home appliances and strong sales of stay-at-home trend products.

The company is expected to reduce its stores by 22 this year (18 road shops and 4 shop-in-shops), following last year's reduction of 18 stores (3 road shops and 15 shop-in-shops). Although sales per store are expected to improve through store diversification, the overall sales growth is predicted to be weak due to the decrease in the average number of stores. Researcher Park said, "As a response, the company plans to continue its growth by actively promoting sales through online shopping malls," and forecasted, "The company's online sales proportion will expand from 15% last year to 20% this year."

According to Hyundai Motor Securities, fourth-quarter standalone sales are expected to increase by 2.3% year-on-year to 982.5 billion KRW, and operating profit is projected to grow by 29% to 21.1 billion KRW. Researcher Jongryeol Park said, "The transition to with-COVID-19 will contribute to improving consumer sentiment, which can lead to increased demand for home appliances," adding, "Due to the recent stock price decline, valuation attractiveness has significantly improved, so it is advisable to approach with a strategy of phased buying at the current price level."

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