[Click eStock] "Hyundai Department Store, Duty-Free Slump Priced In, Department Store Strong... Target Price Up 10%"

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] On the 13th, Korea Investment & Securities maintained its 'Buy' rating on Hyundai Department Store and raised the target price by 10% from the previous 100,000 KRW to 110,000 KRW.

Korea Investment & Securities viewed that although Hyundai Department Store's duty-free business faces uncertainties, strong department store performance is expected to offset this. The duty-free industry is experiencing slow recovery due to China's lockdowns caused by COVID-19, and the commission fees paid to daigou by duty-free companies have remained high since November. However, sales growth in the high-margin apparel category, driven by the reopening starting in March, is leading same-store sales growth. Considering the full normalization of school attendance (March) and the mask removal policy (May), strong apparel sales in department stores are expected to continue through the second and third quarters.

Kim Myung-joo, a researcher at Korea Investment & Securities, stated, "It is difficult to predict the exact timing of a full recovery in the duty-free industry, but the decline in duty-free sales and deterioration in corporate profitability due to China's lockdown have already been reflected in the stock price. When the industry recovers, Hyundai Department Store's duty-free segment will quickly return to profitability, and until then, the strong performance of the department store segment will offset this."

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