Emart Attempts Rebound Amid Market Crash

[Asia Economy Reporter Koh Hyung-kwang] Emart is attempting a rebound amid the market crash. This is interpreted as reflecting the influx of bargain buying and expectations of performance improvement centered on the online sector.

According to the Korea Exchange on the 12th, Emart closed at 114,000 won, up 1.8% from the previous trading day. Although the KOSPI index plunged 2.78% that day, Emart closed higher due to combined buying by foreigners and institutions. As of 9:50 a.m. that day, the KOSPI was down 1.6%, but Emart was trading at 114,500 won, up 0.4%.

On the 21st of last month, Moody's downgraded Emart's credit rating to 'Ba1', a speculative grade, and maintained a 'negative' outlook. Three days later, on the 24th, the stock price slipped below 100,000 won to 99,300 won. This was the 52-week low and the lowest level since June 2011.

The very next day, on the 25th of last month, the stock began to rebound, rising more than 4%, and over the past two weeks until the previous day, it increased by 12.9%. This contrasts with the KOSPI index, which plunged 8.2% (171 points) during the same period.

The stock price, which was around 180,000 won in March last year, has nearly halved in a year, dropping by about 50%. However, with institutional investors' buying activity picking up recently, a rebound is being sought. Institutions have shown net buying dominance for one trading day in a row from the 26th of last month to the previous day, purchasing Emart shares worth 44 billion won during this period.

The COVID-19 pandemic is seen as a factor that could create a favorable situation for Emart, fueling the rebound. Major daily necessities on Emart's online distribution platform, SSG.com, experienced sell-out phenomena due to the COVID-19 situation, changing the industry's perspective on the company.

SSG.com posted an operating loss close to 82 billion won last year. Until before the COVID-19 outbreak, the performance outlook for this year was not bright. It was widely expected that operating losses would be similar to last year or only slightly improved.

However, Hana Financial Investment recently upgraded its investment opinion on Emart from neutral to buy, expressing optimism. Park Jong-dae, a researcher at Hana Financial Investment, explained, "SSG.com's sales in January and February are expected to increase by more than 30% compared to the same period last year," adding, "SSG.com's sales also contribute to the expansion of existing store sales." He added that the sell-out phenomenon at SSG.com is positive not only for sales but also for profit improvement.

The valuation attractiveness of Emart's stock price, which is at its lowest level since listing, has also increased. Researcher Park judged, "Emart is currently the most attractive stock among consumer goods companies."

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