[Click eStock] "Is Emart's Crisis Over... Earnings Improvement Expected from 4Q"

Disaster Relief Fund Benefits Expire from October
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[Asia Economy Reporter Minwoo Lee] Emart's September performance is expected to be sluggish due to the exclusion from the usage scope of the disaster relief fund (National Support Fund) provided by the government. However, from next month, as the impact of the National Support Fund subsides and the acquired Starbucks Coffee Korea's performance is consolidated, there is analysis that the performance will improve.

On the 29th, Yuanta Securities maintained a 'Buy' rating and a target price of 300,000 KRW for Emart based on this background. The closing price the previous day was 169,500 KRW.

For the third quarter of this year on a consolidated basis, sales are estimated at 6.4474 trillion KRW and operating profit at 163.8 billion KRW, representing increases of 9.1% and 8.3% respectively compared to the same period last year. However, these figures are expected to fall short of market consensus by 0.9% and 7.9% respectively. This is due to the judgment that discount store performance inevitably suffers somewhat from the impact of the National Support Fund distributed this month. Researcher Jinhyup Lee of Yuanta Securities explained, "Emart's same-store sales growth rate this month is expected to be around -5% compared to the same period last year," adding, "The earlier Chuseok holiday compared to last year is estimated to have an impact of -1 to -2 percentage points, while the impact of the National Support Fund distribution is expected to be -3 to -4 percentage points."

However, this negative factor is seen to have passed its peak after Chuseok. Last year, the disaster relief fund impact was only felt in the month it was distributed (May). Especially this time, the speed of exhausting the disaster relief fund may be faster due to the Chuseok holiday.

Once free from the impact of the National Support Fund, future performance is expected to improve. Discount stores will return to normal operating conditions from next month. The acquisition of Starbucks Coffee Korea was finalized on the 27th, so Starbucks Coffee Korea's performance is expected to be consolidated from the fourth quarter. The listing process of SSG.COM is also being actively pursued. The platform value of SSG.COM is expected to be highlighted. The researcher forecasted, "In addition, the possibility of revaluation due to Emart24 achieving its annual break-even point, the favorable performance of the U.S. subsidiary, and the improvement in Chosun Hotel's performance will have positive effects."

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