[Click eStock] "Emart, Potential for Stock Recovery Despite Minor Positive Factors... Target Price Maintained"

On the 19th, Korea Investment & Securities maintained a buy rating and a target price of 105,000 won for Emart, stating, "Since market expectations are very low, Emart's stock price will react sensitively to even small positive news in the future." The previous trading day's closing price was 77,000 won.

On the same day, researchers Kim Myung-joo and Jeon Ye-won from Korea Investment & Securities stated, "All the sluggishness that the market was concerned about has already been reflected in the stock price."

Emart's consolidated sales for the fourth quarter of last year were 7.3561 trillion won, down 1.6% year-on-year. Operating loss turned to 85.5 billion won, significantly missing both market expectations and internal estimates.

This was due to a sharp decline in operating profit caused by Shinsegae Construction's operating loss (-97.5 billion won) and an increase in provision liabilities (cost of 32 billion won) due to the remeasurement of long-term employee benefits in the separate division. Ssuk.com focused on top-line growth, with total sales increasing by 29% compared to Q4 2022, and the loss widened to 38.4 billion won from 30.7 billion won in Q3. Gmarket Global turned to an operating profit of 200 million won.

This year, it is judged that the core business and major subsidiaries have passed the worst. Researcher Kim said, "One of the reasons for Emart's sluggishness was the poor performance of existing stores in the discount store division. It underperformed compared to competitors because, unlike them, it includes home appliance sales," adding, "This year, the base for home appliance sales is low, and household demand for eating at home will also increase compared to last year. Operating profit in the separate division is expected to increase by 56.7% year-on-year."

Furthermore, "Although uncertainties related to Shinsegae Construction still exist, all the sluggishness that the market was concerned about with the Q4 results last year has been reflected in the stock price," and "Since the sluggishness was somewhat anticipated, the decline in Emart's stock price after the earnings announcement was not significant. The government's value-up program introduction has become visible, and the number of local governments changing mandatory closure days for large marts to weekdays is increasing," they noted.

Researcher Kim added, "Since current market expectations for Emart's performance and strategic direction are very low, Emart's stock price will react sensitively to even small positive news and show a recovery in stock price going forward."

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