[Click eStock] "Emart, Expectation for SSG.com Paid Membership Conversion"

Korea Investment & Securities Report

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating and a target price of 250,000 KRW for Emart on the 12th, stating that the launch of SSG.com's paid membership could act as a positive factor for the stock price.

In the third quarter, Emart recorded consolidated sales of 6.311 trillion KRW and an operating profit of 108.6 billion KRW. Sales increased by 6.8% compared to the previous year, while operating profit decreased by 28.2%. The decline in profitability is attributed to a 20 billion KRW increase in labor costs due to hiring part-time workers to cover vaccine leave for frontline employees.

Weakness was also influenced by the exclusion of discount stores as places to use disaster relief funds and increased promotional expenses to expand SSG.com's market share. The online market grew by 19.6% year-on-year in the third quarter, and SSG.com's merchandise sales increased by 28%.

From this month, discount stores and Traders are expected to operate normally until 11 a.m., which is predicted to lead to external growth. Myungjoo Kim, a researcher at Korea Investment & Securities, said, "A one-time gain of 1.1 trillion KRW is expected from the revaluation of Starbucks Korea shares in non-operating income on a consolidated basis," adding, "Last month, Emart's same-store sales growth was 11.2%, which is considered favorable even after accounting for the 3% SSG Day effect."

Recently, Emart's stock price has been declining due to doubts about the rebound of the discount store industry next year and concerns over intensified competition caused by the slowdown in the online food market growth. However, if SSG.com's paid membership is launched between the end of this year and early next year, the stock price is expected to rise.

Researcher Kim explained, "The main content of the paid membership will be services from affiliates including Starbucks and Emart," and added, "With the launch of the paid membership, SSG.com will be able to efficiently secure customers, and Emart will also see an increase in customer numbers." He further noted, "The partnership with Naver and the synergy creation strategy with eBay Korea will also gradually become more concrete."

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