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Photo = Yonhap news |
[Alpha Biz= Kim Sangjin] IBK Securities maintained its "Buy" rating and a target price of 75,000 KRW for Hyundai Department Store, citing stable profit growth driven by improved performance from its subsidiary Zinus, despite weak department store industry conditions.
IBK projected Hyundai Department Store's Q4 revenue to increase by 0.9% year-on-year to 1.1318 trillion KRW, with operating profit rising 12.4% to 107.9 billion KRW. However, the firm acknowledged the challenging operating environment in Q4.
IBK explained that the heatwave negatively impacted seasonal product sales, and the increased proportion of discount sales for seasonal clothing contributed to lower profitability. Additionally, a margin decline is expected due to the depletion of Hyundai DF inventory.
Despite the overall weak department store performance, IBK believes that the improvement in Zinus' financial results will help offset these challenges. For Q3, Zinus posted a 23.2% increase in revenue to 272.9 billion KRW and a 271.9% jump in operating profit to 11.9 billion KRW, driven by inventory reductions and new product launches. IBK expects this trend to continue into Q4.
IBK also highlighted that Zinus' profit contribution will likely be further expanded in Q4 due to last year's favorable base and the strong industry environment, enabling Hyundai Department Store to recover from department store and duty-free store downturns.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
