[Click eStock] "Ecomarketing Secures Growth Engine through Share Swap with Andar"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained its buy rating and target price of 35,000 KRW for Eco Marketing on the 12th, based on the positive outlook that the share exchange with Andar will increase overseas sales.

In the fourth quarter, Eco Marketing is expected to record sales of 41.1 billion KRW and operating profit of 14 billion KRW, representing growth of 58% and 78% respectively compared to the same period last year. The operating profit is forecasted to meet the market expectation of 14.1 billion KRW.

It is anticipated that the sluggish performance of Ohora and Mongje due to the seasonal off-season, as well as the slowdown in growth of Cluck, have been reflected. Kihoon Lee, a researcher at Hana Financial Investment, said, “Sales are expected to decline compared to the previous quarter due to the social distancing measures and the sales booster product groups concentrated in the second and third quarters. However, overseas sales driven by the expansion of the D2C (Direct-to-Consumer) channel, which eliminates distribution steps to enhance price competitiveness, are growing rapidly, and if logistics normalize amid the COVID-19 pandemic, significant additional growth can be expected.”

Recently, Eco Marketing announced a share exchange with Andar. CEO Cheolwoong Kim exchanged 144,000 shares for 400,000 common shares of Andar, making him approximately the third largest shareholder on a diluted basis. The researcher said, “Considering that Andar recently sold a 7.5% stake to OEM company Hojun Industry, it is expected to become an important partner not only domestically but also for global expansion, likely acting as a sales booster.”

Eco Marketing’s expected operating profit this year is projected to increase nearly tenfold compared to 2016 (6.8 billion KRW), but it is undervalued with a price-to-earnings ratio (PER) of 16 times. Researcher Kihoon Lee explained, “The limitation of being confined to the domestic market is causing the company’s undervaluation. The company’s key indicator is D2C, and if the logistical difficulties caused by COVID-19 are resolved well, with Andar joining, the company’s growth and revaluation through overseas sales growth will soon follow.”

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