[Click eStock] "Emart, Modest Profit Growth in First Half... Conservative Approach"

IBK Investment & Securities maintained a neutral investment rating and a target price of 98,000 KRW for Emart on the 20th, judging that the profit growth for the first half of this year would not be significant.

Emart's consolidated sales for the first quarter of this year are estimated to be 7.1275 trillion KRW, up 1.8% from the same period last year, and operating profit is expected to reach 54.2 billion KRW, a 57.6% increase. IBK Investment & Securities forecasts that Emart's operating profit will fall significantly short of the market expectation of 82.9 billion KRW.

Expectations for Emart were based on profitability improvement policies leading to better profitability in discount stores, a reduction in losses in the online business division, and increased contribution from improvements in the hotel business division. However, Nam Seong-hyun, a researcher at IBK Investment & Securities, explained, "In the first quarter, due to sluggish conditions in discount stores and separate business divisions, same-store sales growth turned negative, and it seems unlikely to cover the increase in fixed costs, so the initially expected profit improvement is expected to be limited. Also, some subsidiaries' performance fell short of expectations, so profit contribution is expected to decrease."

Researcher Nam also recommended a conservative approach to Emart's second-quarter performance. He said, "The reasons include the effects of the closure of Emart Seongsu store and reduced operating hours leading to decreased same-store sales, a slowdown in profit growth due to the hotel business base, reduced contribution from the sale of Shinsegae TV Shopping, and expected traffic decline due to consumption contraction."

However, the deficit is expected to narrow due to reduced losses in the online business division and the effect of decreased comprehensive real estate tax. Researcher Nam added, "We expect Emart's operating performance to turn to growth starting from the third quarter, but we believe it is reasonable to take a conservative view on the extent of profit improvement."

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