[Click eStock] "Emart, Earnings Improvement Expected with Market Dominance Expansion"

Recovery of Discount Store Competitiveness
Positive Impact on SSG.com Dominance Enhancement

[Asia Economy Reporter Minji Lee] Eugene Investment & Securities maintained a buy rating and a target price of 210,000 KRW for Emart on the 7th, expecting improved earnings due to expanded market dominance.

In the fourth quarter, Emart's sales are estimated to have grown 16% year-on-year to 5.6194 trillion KRW. Operating profit is expected to have turned positive at 75.1 billion KRW. This is due to the expanded contribution of the PP Center (Picking & Packing) and the renovation effect, which continuously boosted the existing store growth rate of discount stores.

Researcher Younghoon Joo of Eugene Investment & Securities said, "Last month, there was one less public holiday compared to the previous year," adding, "Despite the negative factor of shortened business hours due to strengthened social distancing, food demand increased, resulting in a favorable growth trend."

SSG.com, which accounts for a large part of Emart's corporate value assessment, is also expected to show high growth. This is because online food purchase demand has expanded again due to the resurgence of COVID-19. In November last year, Emart Mall's transaction growth rate recorded 40% compared to the same period last year, and it is estimated to have expanded by about 50-60% in December.

Researcher Joo said, "Among subsidiaries, Shinsegae Food and Chosun Hotel sectors inevitably suffered damage due to COVID-19," but added, "However, this is expected to be sufficiently offset by the consolidation effect of Emart24 and Shinsegae TV Shopping subsidiaries."

The recovery of discount store competitiveness and the strengthening of SSG.com's dominance in the online food market are positive for the company. Specialty stores, which had recorded large losses in the past, have also completed restructuring and are no longer considered risk factors.

Researcher Younghoon Joo explained, "Since the base for last year's first half earnings was low, a significant increase in operating profit is expected," and added, "The recent relatively sluggish stock price trend was due to a concentration in some leading sectors, not a decline in corporate value."

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