[Click eStock] "Cafe24 Enters Operating Leverage Growth Phase Starting Q2... Target Price Up"

[Asia Economy Reporter Oh Ju-yeon] NH Investment & Securities analyzed that Cafe24's domestic division has entered a phase of increasing operating leverage effects, and expects a performance turnaround from the second half of the year. Accordingly, the investment opinion was maintained as 'Buy' and the target price was raised from the previous 63,000 KRW to 90,000 KRW.

According to NH Investment & Securities on the 19th, Cafe24's consolidated sales for the second quarter of this year were 62.1 billion KRW, and operating profit was 4.3 billion KRW, increasing by 13.4% and 7.0% respectively compared to the same period last year, significantly surpassing market consensus. The main factor was the sharp growth of its core business due to the expansion of non-face-to-face (untact) consumption.

Cafe24's sales for this year are expected to be 241.7 billion KRW, and operating profit 11.7 billion KRW, increasing by 11.3% and 18.6% respectively compared to the previous year. Despite losses in the first quarter, the operating leverage effect is expected to be prominent from the second quarter onward. Sales in 2021 are expected to reach 280 billion KRW, and operating profit 25.2 billion KRW, marking the beginning of a full-scale operating leverage increase phase.

Researcher Baek Jun-gi stated, "Compared to global competitors, Cafe24 shows a large gap in price-to-sales ratio (PSR)," and added, "Starting from the second quarter results, it will be possible to reduce the discount rate applied to Cafe24." It is understood that Cafe24 currently receives an average PSR discount rate of 84% compared to global competitors.

Researcher Baek explained, "Since the fourth quarter of 2018, the growth rate of Gross Merchandise Volume (GMV) did not exceed 20%, which lowered market expectations significantly, but the GMV growth rate in the second quarter recorded 21.6%, outperforming the market (15.2%). Additionally, labor costs, which had limited the increase in operating leverage, rose by only 2.0% compared to the previous quarter, resulting in a turnaround from the previous quarter's loss."

He continued, "Considering the growth rate of online shopping, this trend is highly likely to continue in the second half of the year," emphasizing, "Especially after the COVID-19 pandemic, the growth rate of online purchases of daily necessities increased by more than 40% compared to the previous year."

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