[Click eStock] Hyundai Department Store Reopening: Coexistence of Expectations and Concerns... "Hope for Consumer Sentiment Recovery"

[Asia Economy Reporter Lee Myunghwan] Hana Financial Investment stated on the 30th that it expects a recovery effect in consumer sentiment for Hyundai Department Store and maintains a buy rating with a target price of 98,000 KRW.

Hana Financial Investment forecasts that the company's consolidated sales for the first quarter of this year will increase by 15% year-on-year to 2.333 trillion KRW, and operating profit will rise by 18% to 77 billion KRW. It analyzed that sales growth will be driven by an 8% increase in existing department store sales and a 30% increase in duty-free store sales. For the department store, it noted that the shift in focus from living and home appliances last year to high-margin fashion categories is positive in terms of profitability. The duty-free store's daily sales in the first quarter are expected to be around 7 billion KRW due to the Beijing Winter Olympics, which is higher than last year's estimated daily sales of 5 billion KRW. However, it is forecasted that the deficit will slightly increase due to a rise in discount rates for Taigong (Chinese traders).

Hana Financial Investment's analysis indicates that expectations and concerns about reopening (resumption of economic activities) coexist amid the domestic spread of COVID-19. Researcher Park Jongdae of Hana Financial Investment diagnosed, "If the Omicron variant has passed its peak, a gradual recovery in domestic consumption can be expected." He analyzed that the decline in department store performance in March was due to the high number of people in self-quarantine. The resumption of overseas travel is considered an uncertainty factor as demand for luxury goods may shift to overseas travel.

Annual operating profit for the department store business this year is expected to increase by 17% due to category mix improvement and the normalization of operations at The Hyundai Department Store. With the expansion of the duty-free store business last year, it is expected to elevate its business scale by attracting numerous famous global brands.

Researcher Park said, "It seems more appropriate to weigh the recovery effect of consumer sentiment rather than concerns about the resumption of global travel," and analyzed that "increasing the weighting is valid."

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