[Click e-Stock] "Ecomarketing, Disappointing Results... Target Price Lowered"

On May 16, Hana Securities lowered its target price for Ecomarketing from 13,000 won to 11,500 won, stating that the company delivered disappointing results in the first quarter.

Ecomarketing started as an online advertising agency and has expanded into a "business boosting" operation, which involves discovering companies, investing in them, nurturing them, and then recovering the investment. In 2017, it acquired Daily&Co, a household goods company, and in 2021, it acquired Andar, a sports and leisure apparel company. Daily&Co sells the "Klug" mini massager and the "Monje" mattress.

According to the consolidated results disclosed in the quarterly report released the previous day, first-quarter sales reached 72.9 billion won, up 17% year-on-year. However, operating profit fell by 53% to 2.4 billion won, failing to meet the securities market consensus of 4.5 billion won. It should be noted that one-off advertising expenses of 1.4 billion won were reflected in the results. Hana Securities expects the company's annual operating profit this year to be at the breakeven point (BEP) level.

Analyst Lee Gihun commented, "Domestically, with the exception of Andar, there have been no meaningful achievements in the consumer goods sector where the company previously had strengths, resulting in stagnant sales growth for three consecutive years through this year." He added, "Ultimately, the company needs to achieve very strong results overseas to compensate for this, and since its full-scale overseas expansion will begin in the second quarter, it will be important to monitor the results in the second half." He therefore predicted that the stock price would adjust until a recovery in performance can be confirmed.

Regarding Ecomarketing's overseas expansion, he stated, "The nail product 'Fingersuit' has selected Twice's Nayeon as its advertising model, aiming to accelerate brand expansion in the Japanese market. The long-awaited full-scale overseas expansion of Andar is also beginning, with its first store opened in Westfield Sydney, Australia, and entry into the US market expected within the second quarter."