Shinhan Investment Corp. announced on November 5 that it has lowered its target price for Hyundai Department Store by 17% to 120,000 won, reflecting a slowdown in department store growth and concerns over Zinus's performance. The investment rating remains at 'buy.'
Research analyst Cho Sang-hoon stated in a report that a 20% discount was applied to the global peer valuation due to limited improvements in return on equity (ROE).
Hyundai Department Store reported third-quarter sales of 1.1723 trillion won and operating profit of 94.6 billion won, exceeding market expectations by 11%. Cho noted that while the growth rate of department store transactions fell to 9% from 16% in the previous quarter, it performed better than feared. He also highlighted that foreign sales remained stable despite the strengthening won.
Although Zinus continued to struggle with poor performance, the operating loss decreased. Cho reported that Zinus's sales declined by 6.8%, but the operating loss shrank from 26.7 billion won in the second quarter to 12.5 billion won in the third quarter. He anticipates that future improvements will come from customs refunds, sales recovery, original design manufacturing (ODM) supply, and fixed cost reductions due to enhanced production efficiency.
Additionally, he expects that increased purchasing power among high-income consumers due to semiconductor bonuses, major store renovations, and differentiated merchandise planning will help overcome challenges. Significant operational leverage is also anticipated from reduced competition at downtown duty-free shops and a turnaround in airport store profitability.
* This article has been translated by AI.
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