[Click eStock] "Emart, Slow Pace of Profitability Improvement... Buy Recommendation Maintained"

On the 16th, Samsung Securities evaluated that Emart's profitability improvement in the retail sector is progressing slower than initially expected. Accordingly, they maintained a 'Buy' investment rating but lowered the target stock price to 95,000 KRW.

Park Eun-kyung, a researcher at Samsung Securities, stated, "In the second quarter, sales increased by 2% year-on-year to 7.27 trillion KRW, with an operating loss of 53 billion KRW," adding, "The operating loss was below market expectations."

Researcher Park explained, "This was due to a reduction in operating losses in the retail and e-commerce businesses. However, the construction business, a non-core affiliate, turned to a loss (-33.8 billion KRW), resulting in consolidated earnings falling short of market expectations."

The retail segment, covering both online and offline, saw sales decrease by 1.5% year-on-year to approximately 5.3 trillion KRW, while the operating loss improved by 6 billion KRW to 47.2 billion KRW. Considering the impact of Shinsegae Live Shopping, which was sold in the fourth quarter of last year, the actual improvement in operating profit is estimated to be around 13 billion KRW.

The combined operating loss of online affiliates (SSG.com, Gmarket) was 29.6 billion KRW. Researcher Park noted, "This is an increase of 36 billion KRW compared to last year, but the operating loss expanded by 3.1 billion KRW compared to the previous quarter," analyzing, "It appears to be influenced by the launch of the group's integrated membership 'Shinsegae Universe' in June." Emart indicated it will continue efforts to reduce costs in its e-commerce business. Gmarket aims to turn profitable in the fourth quarter of this year.

Operating profit of offline affiliates decreased year-on-year. In the core food distribution business (discount stores, Traders, No Brand, Everyday, 24), operating profit slightly declined as expected. Researcher Park explained, "The sales growth rate did not even reach 1%, failing to offset the increase in fixed costs such as utility expenses. The biggest blow was Shinsegae Property recording an operating loss of 5.3 billion KRW."

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