[Click eStock] "Emart, Major Business Segment Performance Improvement Expected"... Target Price Up

[Asia Economy Reporter Lee Jung-yoon] NH Investment & Securities maintained a buy rating on Emart on the 21st, citing high earnings momentum due to profitability improvements in key business sectors, and raised the target price from 135,000 KRW to 145,000 KRW.

Emart's operating profit this year is expected to increase by 162% year-on-year to 380.3 billion KRW, marking the highest growth rate within the distribution industry. Ju Young-hoon, a researcher at NH Investment & Securities, explained, "We plan to reduce losses in the online business by more than half, and profitability improvement is expected in discount stores as well through measures such as adjusting operating hours," adding, "This is because one-time recall-related costs incurred last year at SCK Company will be eliminated."

He continued, "There is also potential for further upward revision of earnings estimates if the mandatory closure regulation is relaxed nationwide," noting, "Last week, Daegu implemented the first regulatory relaxation by changing the mandatory closure day from Sunday to Monday." Although there are only five Emart stores in Daegu, so the impact on estimates is minimal, the regulatory relaxation is significant as it is the first in 10 years. Expectations are high for expansion to other regions, and if 50% of nationwide stores switch their mandatory closure days to weekdays, sales could increase by 200 billion KRW and operating profit by 50 billion KRW.

Researcher Ju stated, "We provide same-store sales growth guidance of 2.5% for discount stores and 7.0% for Traders this year," adding, "Considering recent performance, these are conservative figures, and with variables such as the relaxation of mandatory closure regulations remaining, we believe there is high visibility for exceeding these targets."

Additionally, Emart announced a shareholder return policy for the next three years, setting a principle of allocating 20% of separate operating profit for dividends, and if the return amount falls short of 2,000 KRW per share, the 2,000 KRW paid in 2022 will be set as the minimum dividend. Although the absolute dividend yield is not high, the gradual increase is viewed positively.

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