[Click eStock] "Hyundai Department Store, Zinus Disappoints but Department Store and Duty-Free Businesses Soar"

DB: "Target Price Raised to 240,000 Won"

On July 8, DB Financial Investment raised its target price for Hyundai Department Store from 150,000 won to 240,000 won while maintaining its 'Buy' investment rating.

Jena Heo, a researcher at DB Financial Investment, analyzed, "The sharp sales growth at the Pangyo branch, which boasts the largest annual revenue, as well as strong growth at key locations such as The Hyundai, Trade Center, and Apgujeong branches, is a positive sign." She added, "With the expansion of duty-free sales space, profit contribution is expected to increase further in the second half of the year."

Regarding the recent share price trend, she said, "The ongoing adjustment reflects the weak performance of Zinus," and explained, "At a 12-month forward price-to-earnings ratio (PER) of 12.3 times, Hyundai Department Store is currently trading in an attractive valuation range. We maintain our Buy rating, focusing on earnings growth in the core business."

She also projected that second-quarter operating profit will fall short of market expectations due to Zinus's sluggish performance. Heo estimated consolidated operating profit for the second quarter at 79.4 billion won, down 8.6% year-on-year, and commented, "While the department store and duty-free businesses are expected to deliver solid results, we forecast overall earnings will fall short of consensus due to Zinus's underperformance."

For the department store segment, she forecast a 15% year-on-year increase in managed sales for the second quarter. She analyzed that watches and jewelry will see a 50% sales increase, general luxury goods will rise by 20%, and fashion by 5%, leading to continued improvement in profitability compared to the previous year.

In the duty-free segment, she projected sales would remain at a similar level to the first quarter. Heo noted, "Since the opening of the DF2 site on April 28, daily sales have been about 1.1 billion won," and added, "Although it will take some time for large-scale cosmetics sales to ramp up at the new site, its contribution to overall sales is expected to gradually increase in the second half."

She predicted Zinus would post an operating loss of about 30.7 billion won in the second quarter. Heo stated, "Sell-out sales have started to recover since the end of May, but channel sales remained sluggish through the second quarter," and explained, "From this quarter, structural improvement initiatives are beginning in earnest. Approximately 10 billion won in compensation for the early withdrawal from the logistics warehouse will be reflected as non-operating income. In addition, some refunds related to the payment of U.S. reciprocal tariffs are also expected to be recognized."

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