[Click eStock] "Emart, 2Q Loss Expected to Widen... Target Price Down"

On the 21st, KB Securities analyzed that a meaningful stock price rebound for Emart is possible only after concerns about business competitiveness and earnings uncertainty are resolved. Accordingly, they maintained a 'Buy' investment rating and lowered the target price by 9% to 100,000 KRW.

Researcher Park Shin-ae of KB Securities stated, "The consolidated net sales for Q2 are expected to increase by 3% year-on-year to 7.3342 trillion KRW, while the operating loss is forecasted to widen to 19.5 billion KRW compared to last year."

Park explained, "Total sales at discount stores are expected to decline by 1%, with an operating loss of 48 billion KRW (an increase in loss of 11.6 billion KRW YoY). Due to renovation work (Kintex branch) and store closures (Seongsu branch), along with increased costs such as utility expenses, the operating profit margin is estimated to worsen by 0.4 percentage points."

Overall, earnings are expected to be weak. Traders are projected to see a 16% decrease in operating profit due to poor same-store sales (-2.7%). SSG.com’s operating loss is expected to shrink by 25.8 billion KRW compared to the previous year, and Gmarket Global’s operating loss is anticipated to decrease by 9.2 billion KRW.

Starbucks sales are expected to grow by 9%, but operating profit is forecasted to decline by 16% due to continued cost increases from the strong dollar. Emart24’s operating profit is expected to plunge 47% YoY, and Shinsegae Construction’s operating profit is also projected to decrease by more than 10 billion KRW. Chosun Hotel’s operating profit is expected to increase by 4.1 billion KRW compared to last year.

Researcher Park stated, "For 2023, consolidated net sales are projected to increase by 2.5% year-on-year to 30.1 trillion KRW, and operating profit is expected to rise 39% to 188.5 billion KRW." However, operating profit is anticipated to fall short of consensus estimates by 22%.

Park added, "Separate total sales (discount stores/Traders/specialty stores) are estimated to decline by 1%, with operating profit decreasing by 24%. Despite an increase in customer visits, the spread of 'recession-type consumption' is causing a drop in average spending per customer, limiting top-line growth."

She continued, "Starbucks’ operating profit is expected to increase by 35% based on a low base effect, but the operating profit margin will significantly deteriorate to 5.7% compared to the past."

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