Heungkuk Securities lowers target stock price for Hyundai Department Store to 150,000 won

(Seoul = Yonhap News) Reporter Kang Su-ji = Heungkuk Securities announced on the 16th that it was lowering its target stock price for Hyundai Department Store [069960] due to the delayed performance improvement of its consolidated subsidiary Zinus [013890], while predicting strong performance of department stores and duty-free stores.

Researcher Park Jong-ryeol lowered Hyundai Department Store's target stock price from 170,000 won to 150,000 won in a report that day. Compared to the previous day’s closing price of 98,200 won, the upside potential is 52.7%.

Heungkuk Securities predicted Hyundai Department Store's total sales on a consolidated basis in the third quarter to be KRW 2.5 trillion, up 7.5% from the same period last year, and operating profit to be KRW 95.8 billion, up 31.4% from the same period last year.

In particular, department stores are expected to see an operating profit margin of 6.2%, an improvement of 0.9 percentage points compared to the same period last year, thanks to the favorable performance of all product groups, including fashion, cost efficiency, and growth of high-margin product groups.

Duty-free stores are also expected to see their operating profit surplus expand in the third quarter and their operating profit ratio rise to 1.4% due to improved profitability at downtown stores, stable growth at airport stores, and operational efficiency.

However, due to the delay in Zinus' performance improvement, it is expected that annual consolidated operating profit in 2026 will be somewhat lower than initially expected. Accordingly, this year's annual consolidated total sales forecast was lowered to KRW 9.9 trillion and operating profit forecast was lowered to KRW 421.2 billion.

Zinus' operating loss forecast for 2026 is KRW 86 billion, and Researcher Park believes that sluggish sales and operating losses due to the U.S. tariff policy will hinder consolidated performance.

However, even though the target price was lowered, the investment attractiveness was evaluated as high.

Researcher Park predicted, “With the recent plunge in the stock price, the price-to-earnings ratio (P/E) and price-to-book ratio (P/B) based on 12-month forward basis are 5.7 times and 0.4 times, respectively, and the attractiveness of valuation has greatly improved,” and predicted, “We are expected to secure mid- to long-term growth engines through the opening of new stores in key commercial districts such as The Hyundai Busan, Gyeongsan Premium Outlet, and The Hyundai Gwangju.”