Benchmarking the 'Coupang Strategy'... Can Emart, Which Acquired eBay, Transform into a Growth Stock?

Estimated Annual Interest Expense of 30 Billion KRW, Earnings Impact Inevitable
Focus on Scale Growth Over Profitability Like Amazon and Coupang
Supporting Growth Potential Is Key... "Absolute Market Share Expansion Needed"

[Asia Economy Reporter Ji Yeon-jin] Emart is expected to face inevitable performance deterioration due to financing costs as it invests the largest amount of capital in its history to acquire eBay Korea. This is interpreted as a strategy focused more on external growth than profitability, similar to Coupang, which benchmarks Amazon in the U.S., aiming to be evaluated by investors for growth potential. However, there are also concerns that if market share does not expand after the acquisition, the corporate value could plummet.

According to the Financial Supervisory Service's electronic disclosure on the 28th, Emart established a special purpose company (SPC) Emerald SPV to acquire an 80.01% stake in eBay Korea for 3.44 trillion KRW. Applying Emart's past average store opening cost (70 to 80 billion KRW) per store, this corresponds to an investment cost equivalent to opening 50 to 60 offline stores.

Currently, Emart holds about 1.9 trillion KRW in cash, and the estimated annual interest cost for the additional 1.4 trillion KRW needed is expected to reach 30 billion KRW. Furthermore, including the 1 trillion KRW investment cost for logistics centers after the acquisition and the acquisition cost of Starbucks Korea, approximately 2 trillion KRW in funds will be required, which could further increase the interest burden. This directly leads to profit reduction.

Due to the recent shift in consumer trends toward online, Emart's acquisition of eBay Korea is analyzed as an inevitable choice for the digital transformation of its revenue model. As of last year, the domestic e-commerce market is dominated by three companies with double-digit market shares: Naver (16.8%), Coupang (13.1%), and eBay Korea (10.8%), while others have less than 10%, indicating no absolute leader. With this acquisition, Emart's market share will soar from 2.4% last year to 13.2%, threatening Coupang's position as the second-largest player in the e-commerce market.

The market anticipates poor performance following Emart's acquisition of eBay Korea, warning that failure to achieve a dominant market share expansion could be fatal to corporate value. Growth stocks such as Naver, Kakao, and Coupang are highly volatile depending on liquidity and issues. Since Emart has joined these growth stock groups through the acquisition, if growth potential is not supported, its stock price could fall sharply. Park Jong-dae, a researcher at Hana Financial Investment, stated, "Naver and Kakao are expanding operating profits, but Coupang is in a state of large operating losses, making it more vulnerable to overall stock market volatility. More detailed analysis and confidence in the industry's direction and the company are necessary, and if the management's vision is not fully shared and empathized with, it will be difficult to withstand stock price crashes without shaking."

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