[Click eStock] "Emart to Record Solid First Quarter Performance"

Hyundai Motor Securities Report

[Asia Economy Reporter Minji Lee] Hyundai Motor Securities maintained a buy rating and a target price of 180,000 KRW for Emart on the 29th, expecting the company to record solid first-quarter earnings despite sluggish performance in discount stores and Traders this year.

In the first quarter, Emart is expected to post favorable results due to the inclusion of Starbucks Korea's consolidated profit and loss, despite the poor performance of separate subsidiaries such as discount stores and Traders. On a consolidated basis, sales are predicted to reach 6.962 trillion KRW, and operating profit 141.4 billion KRW, representing growth of 18% and 14% respectively compared to the same period last year.

Jongryeol Park, a researcher at Hyundai Motor Securities, said, "Although Emart's business division operating profit on a separate basis is expected to decline by 17% year-on-year, the improvement in the performance of consolidated subsidiaries was effective," adding, "Despite the expanded operating loss of SSG.COM, the additional consolidated profit and loss from Starbucks Korea was the main reason for the increase in consolidated operating profit."

Separate sales are expected to fall by 0.9% to 4.1586 trillion KRW, and operating profit by 17% to 49 billion KRW compared to a year ago. Following the previous quarter, specialty store operating losses are expected to continue, along with continued profit declines in discount stores and Traders.

Researcher Park analyzed, "Since the second half of last year until now, the consumer market has been recovering mainly in the luxury goods market due to income polarization," and added, "Inflation and interest rate hikes are negatively impacting the essential goods market for low- and middle-income groups."

However, from the second half of the year, gradual performance improvements and increased profit contributions from discount stores and Traders are expected. The reflection of Starbucks Coffee Korea's consolidated results is also anticipated to be a strong pillar for performance improvement.

In the case of SSG.COM, expanding market dominance in the e-commerce market alongside eBay Korea appears to be a priority. Researcher Park stated, "Although the expansion of operating losses is inevitable, it is considered an investment cost for growth," and added, "With improvements in discount stores and Traders in the second half, the stock price could be re-evaluated."

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