[Click eStock] Emart, Late Changes and Expectations

[Asia Economy Reporter Hwang Junho] Korea Investment & Securities has lowered the target price of Emart to 220,000 KRW, citing expected losses at SSG.COM.

Emart's operating profit in the fourth quarter of last year was 76.1 billion KRW, down 10.3% compared to the previous year. The performance was reduced by 24 billion KRW in amortization expenses from PPA (Purchase Price Allocation) related to the acquisitions of Starbucks and eBay Korea, as well as one-time costs of 17.4 billion KRW related to the eBay Korea merger. Additionally, the expansion of losses at SSG.COM and increased labor costs due to temporary hiring related to COVID-19 also had an impact.

Korea Investment & Securities also viewed Emart's slower response to the online market compared to competitors Coupang and Naver as a weakness. Coupang launched its paid membership in June 2019, and Naver in June 2020. Emart, through its fourth-quarter earnings announcement last year, revealed plans to launch an integrated online membership in the second quarter of this year and officially announced plans to release a group-wide online and offline integrated membership in the fourth quarter. The paid membership of SSG.COM can be seen as a factor that promotes the joint growth of both SSG.COM and Emart.

Kim Myungjoo, a researcher at Korea Investment & Securities, stated, "We maintain a buy rating but adjust the target price from the previous 250,000 KRW to 220,000 KRW," adding, "Emart's market share in the retail sector is expected to increase by 4.5 percentage points this year, maintaining Emart as a top pick in the distribution industry."

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